In order to prevent anyone from getting hold of your bitcoins or altcoins, the so-called sideline from the wallet should be kept in a safe place. As a reminder, a sid-phrase is a unique combination of 12, 18 or 24 words that allows you to access and manage the contents of an address in the blockchain. A cid or mnemonic phrase is a kind of identification of the owner of the coins and gives the right to conduct transactions with them. This is essentially the combination needed to sign transactions and broadcast them to the network.

In a recent article Cointelegraph journalists took a closer look at the best and worst places to store the secret combinations. Naturally, you need to know them in order to avoid fatal mistakes.

How to protect your cryptocurrencies?

As we have already noted, there are no special security agencies in blockchain, so no one will verify your identity before making transactions here. Accordingly, the person with the right combination will be considered the full owner of the coins.

An example of a Sid-phrase

This is a big advantage, because you can use your wallet anywhere in the world with the secret combination. But there is a disadvantage, too: giving someone the SID phrase or losing it would also mean losing access to your crypto. Moreover, the secret combination can sometimes be stolen even after a person has been kidnapped or threatened with torture - alas, there have been such cases in the history of the crypto-industry.

In order to keep a Sid phrase safe, it must be made as less public as possible. In other words, it is highly undesirable to store the secret combination – and any other passwords – in the cloud or any other online services. Incidentally, this is exactly the mistake made earlier by Heather Morgan and Elijah Lichtenstein, the married couple accused of laundering stolen money from the Bitfinex crypto exchange. The fraudsters stored the keys to the cryptocurrency wallets containing the stolen crypto in iCloud, which helped law enforcement authorities get on their trail.

Cryptocurrency owners should also avoid putting combinations in notes on their smartphones. The same applies to any other device that has internet access. This fact makes them a possible target for hackers who are able to steal cryptocurrencies.

There are more creative ways to save a sido phrase – on metal, for example

You should also keep in mind the rules of cyber hygiene – no suspicious links, files, applications or contacts that insistently try to ferret out the secret combination. It should be kept at home or another secure location, but in a designated location.

The best place would seem to be plain paper – just write the SID phrase in your notebook or simply on a piece of paper. But there is a nuance here. As Crypto Asset Recovery founder Chris Brooks points out, cryptocurrency owners have a much better chance of losing a mnemonic phrase due to their own forgetfulness than due to a hypothetical hacker attack. An envelope or notepad with the coveted combination can easily be forgotten and thrown away during another housecleaning.

A safe will save you time and possibly a fortune in crypto

Instead, Brooks advises to get yourself a separate safe, or even a wooden box for the most important documents. That’s where you should deposit the SID phrase. The phrase will not get lost in the safe, and you will always know that there is the secret combination near your documents.

A case in point shows exactly how not to handle secret combinations. The story was made public through an anonymous posting to the Coinfessions Twitter account. It goes like this.

I was at an NFT NYC event where I got really drunk and then walked home at a late hour. So I decided to delete MetaMask and a note with the sid-phrases in case of a mugging. Today I reinstalled the wallet and discovered that I don’t have a backup copy of the notes. My accounts are not synced to any other device. I’m in a hard hole, a hole of over $100,000.


Note that here the crypto investor made several mistakes at once. First, he kept more than $100,000 in a wallet inside a mobile device, i.e. with an internet connection. Second, he stored the Sid-phrases in his smartphone, which is also a gross violation of security rules.

In this case, it's more reliable to use hardware wallets - like the Ledger we're already familiar with. They store the Sid phrase internally, don't release it to the Internet, and don't share the combination with anyone else at the same time. And if you use such devices with a smartphone, you can't make a transaction without confirmation on the hardware. And you don't have to carry the Sid-phrase with you; you have to keep it in a safe place.


Ledger Nano S hardware wallet


We think that keeping a sid-phrase on your smartphone is just not a luxury, because sooner or later you will end up losing your cryptocurrency. The coveted combination should be kept in a place that other people don't know about and, ideally, use hardware wallets to confirm transactions, providing an additional layer of security. Your coins will then be able to be stored for a much longer period of time.


More useful tips for crypto-enthusiasts can be found in our millionaires’ crypto-chat. There we will discuss other important developments in the blockchain world.