A passphrase is different from your 12-24 word seed phrase. It is an optional, advanced security feature that allows you to create a new wallet by adding an additional word to a 12-24 seed phrase. It is supported by many wallets utilizing the BIP39 standard.
Think of it as an additional word to your seed phrase that can be (almost) anything. (A-Z, a-z, 0-9, special characters i.e. ASCII characters.)
Your seed phrase by itself is technically a wallet with an empty ("") passphrase. And as such, is a valid wallet. Adding a passphrase creates a different brand new wallet on top of your seed.
Thus, you can have one single seed with multiple passphrases to create multiple different wallets. Each wallet would be designated by a different passphrase.
Generally, new wallets will default to generating a standard BIP39 seed (without a passphrase). Then you will have to activate the passphrase setting which will create a new zero balance wallet.
You will have to send your funds to the new wallet with the passphrase.
To recover your passphrase wallet, you would enter your seed without the passphrase. Then activate the passphrase setting again and enter in your passphrase.
Remember, there is no such thing as a “wrong” passphrase. Every different passphrase you enter is a entirely new wallet. Be careful when recovering your seed with a passphrase.
Using a passphrase allows you to introduce outside parties such as:
- Storing a copy of your seed in safety deposit box and keeping your passphrase at home
- Putting your seed OR your passphrase in your will (Not Both!) and keeping the other at home
- Sharing your seed's location with someone else and not worrying about them being able to take your funds.
A passphrase can also protect you if someone physically threatens you for your seed.
Again, your recovery seed phrase by itself is a valid wallet with an empty passphrase ("").
Your recovery seed phrase with a passphrase is another different separate and valid wallet.
Thus, you could load your wallet recovery seed phrase (without a passphrase) with a small amount and have a hidden true wallet (with the passphrase) with your real amount.
Then in a theft or threatening scenario, you can give your attackers the recovery seed phrase (without the passphrase) and they could recover the wallet without knowing you have another wallet using a passphrase
What is a good passphrase?
This can be a complicated answer and depends on what kind of characters you're using (uppercase, lowercase, numbers, special characters), how you generated it, and it's "randomness".
In general something like 12 word sentence, 6-7 random words, or 10-13 random characters are viable. Ensure your passphrase cannot be "guessed" by referencing anything to your personal life (family names, favorite foods, etc.)
We strongly recommend reading the following when choosing a passphrase: Is Your Passphrase Strong Enough?
Where should I store my passphrase?
First and foremost you should store it SEPARATELY from your seed. Having your seed and your passphrase in the same location defeats the purpose of having a passphrase in the first place.
It's possible to store your passphrase digitally (using a secure password manager, encrypted file, etc.) given your seed is stored physically.
If you want to store your passphrase physically, we'd recommend creating multiple copies. We do offer metal storage as well in our Blockplate PASSPHRASE.
CAUTION: Using a passphrase adds another layer of responsibility and potential mode of failure. Having a passphrase is another key piece of information you have to manage. If you lose or forget your passphrase, you're out of luck.
Remember, passphrases are case-sensitive and even a space (“ “) is considered a character.
If you input the “wrong” passphrase, your wallet will not give you an error. It will create another entirely new and empty wallet.
Too much security is just as dangerous as too little security.
Do what you feel is realistic and comfortable for your own unique situation and environment.