BIP 39 standard

The BIP 39 standard is a specification outlining how to create seeds (master private keys) for cryptocurrency wallets through the use of a mnemonic phrase, typically consisting of 24 words. Charles Guillemet, CTO at Ledger, explains that this standard includes a mechanism to add an additional passphrase (a 25th word) to the mnemonic phrase, creating a secondary, hidden wallet. This setup is often used for plausible deniability purposes. Users can present a decoy wallet with less significant funds, while the real wallet remains hidden and secured with the extra passphrase 1 .

Key points about the BIP 39 standard:

• Mnemonic Phrase: Typically 24 words used to generate the seed for a wallet.
• Passphrase Addition: An optional 25th word acts as a passphrase, creating a new hidden wallet.
• Security Feature: Useful for plausible deniability; show a less valuable decoy wallet while securing the main wallet with the additional word.
• Recommendation for Users: New users should stick to the 24-word setup. The 25th word mechanism is more suitable for advanced users due to its complexity 1 .

In summary, BIP 39 enhances wallet security by allowing an additional layer of protection through a passphrase, creating a versatile and secure system for cryptocurrency storage.