Have you ever seen a bank vault with a big round door in the movies? Usually they are made like this: there is a special secure room in the bank (depository) where hundreds of safe deposit boxes are installed, each of which is also a safe with a separate key.
In order to take money from the safe deposit box, you have to first open the room and then the individual safe deposit box.
A multi-currency crypto-purse works according to a similar scheme:
Let’s say you’ve created a TrustWallet wallet and you have several cryptocurrencies in there: BTC, ETH, BNB, DOGE. All of these cryptocurrencies work on different blockchains.
Your wallet is protected by the Seed phrase you received when you first registered. If you compare it to a safe, the Seed-phrase is your key to a safe deposit box (depository), which gives you access to all the cryptocurrencies in your wallet at once.
For example, if you lost your smartphone, you can enter your Seed-phrase on another device and get access to all your cryptocurrencies that were in TrustWallet.
- A Seed-phrase is a key to a vault with cells
- And a private key is a key to an individual vault cell.
- The Seed-phrase gives you access to all of the wallets in the app: BTC, ETH, BNB, DOGE.
- A private key gives you access to every single wallet in the app. The BTC wallet has its own separate private key, the ETH wallet has another private key, and so on.
Why are private keys needed?
Private keys are needed to send cryptocurrencies from the wallet, they “sign” transactions. You can also use them to import your wallet elsewhere.
But they are inconvenient to use because they are just a huge set of characters: 5JPeWYZx922hXi49Lg2RIPWLIqcmDGS9YegMNgANvx8cJa6kNK8
That’s why developers came up with Seed phrases (a set of 12-25 simple words) in 2013, which make it easier to work with wallets: easier to import wallets, harder to make a mistake when typing.
But private keys are still used, you just can’t see it: they are generated based on Seed-phrases when creating a wallet, they sign transactions and you can use them to import your wallet elsewhere in the same way (not all wallets support Seed-phrases).