Confused about wallets?

Your Cardano wallet acts as a secure portal to interact with the blockchain, but the real key lies not in the software itself, but in a series of seemingly random words: your seed phrase.

A standard for these phrases, known as BIP39, ensures compatibility with many wallets and exchanges. While some wallets offer custom lengths for additional security or user preference, 12, 15 and 24 words represent the most secure and widely adopted options. The wallet software itself, like Eternl, Yoroi or Daedalus, securely stores a representation of these keys, allowing you to interact with the blockchain and manage your funds.

The wallet software, like Eternl, Daedalus or Lace, is simply a user interface that allows you to see your balances, interact with tokens, and send transactions. But it doesn’t hold your actual funds – it holds a secure representation of your master key, letting you interact with the blockchain to manipulate your data stored on it.

However, securing your digital assets demands more than just a robust key, authenticating transactions requires a cryptographic handshake.

  1. Initiating the Transfer: You select the desired amount and recipient for your transaction within the user-friendly interface.
  2. Unlocking Your Vault: As an additional layer of security, you’ll be required to enter your wallet password, acting as a gatekeeper to your seed phrase and ensuring only you can authorize transfers.
  3. Signing the Document: Once your password is verified, the software uses your seed phrase to unlock the private key needed for this particular transaction. With the private key in hand, the software digitally signs the transaction. This signature acts as your personalized cryptographic stamp.
  4. Broadcasting the Message: The signed transaction is then broadcasted across the Cardano network, a message for all nodes to receive and verify.
  5. Verification and Approval: The network of dedicated computers verify your signature and ensure the transaction adheres to network rules. If everything checks out, the transaction is permanently recorded onto the blockchain, and your ADA, and/or tokens safely reach their destination.

While this cryptographic handshake significantly increases security, remember that robust cybersecurity practices are paramount. A strong password, and vigilance against phishing attempts are essential. Hardware wallets further increase this security when used correctly.

Whether you use a hardware wallet or a software wallet it’s vitally important that you keep your seed phrase safely and securely.


That sounds hard because you have wallet software on your computer so you have to type it in at least once. A hardware wallet can protect against even that exposure.

Never exposing them means

  • not storing them in a digital file (document or image) on your computer.
  • not storing them in a digital file (document or image) on your phone.
  • not storing ithemin a digital file (document or image) online ANYWHERE even if you think that the data is encrypted or in a safe space.
  • never entering your keywords into WhatsApp Telegram or any other app, even if it says it has encryption.

As far as passwords go to unlock your wallet if you use a software wallet (hardware wallets have their own on device unlocking). All the normal password rules apply

  • Choose a hard to guess password.
  • Make the length at least 10 characters but longer than that is better.
  • Remember that if you forget this password you can always restore the keywords into a fresh wallet and recover your funds.
  • Don’t store the pasword online EVER (see above).
  • Every time you type your password to carry out a transaction there is a chance malware on your computer could send that to a bad actor. If they have access to your computer they can then drain your funds.

I would recommend that if you have more that $200 of cryptocurrency that you use a hardware wallet. That $200 is likely to grow in value. If you spend $70 on a hardware wallet you can secure what might one day be worth $1000s. Better to reduce that $200 thats insecure to $130 thats safe.

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