Passphrase, the 25th word: hidden wallet and the risk of loss

Take an example. Marek secured his bitcoin exactly as the guides advise: a Trezor, the phrase on a steel plate, a copy in a second place. To be safe he added a passphrase he made up from memory. Five years later he replaces the device, restores the wallet from the phrase, types the password “like always” and sees zero. The password had an exclamation mark at the end. Now he doesn’t remember it.

That’s a typical passphrase scenario: good protection that turns into a lock without a key years later. Below we describe what a passphrase gives you, what can go wrong and how to describe it to your family. If you’re choosing hardware, start with the pillar on the hardware wallet.

What a passphrase gives you

A recovery phrase (12 or 24 words) lets you rebuild the whole wallet. Whoever sees it has the funds. A passphrase adds a second ingredient: even with the correct phrase, nobody opens the wallet without the password.

Technically it works like this. The BIP-39 standard says the words of the phrase and the extra password produce a seed, from which the keys are calculated. The password enters the calculation as part of the salt, together with the string “mnemonic”. The specification notes that every passphrase produces a valid seed and a deterministic wallet. Change one character and you get a completely different wallet.

Two practical benefits follow.

1. Stealing the card stops being enough. A thief who finds the phrase in a drawer opens only the wallet without a passphrase, and that one can be empty or hold a small amount.
2. Hidden wallets. One phrase can serve several wallets: the default one (no password) and any number of hidden ones, each with its own password. The BIP-39 specification mentions plausible deniability: since every password gives a valid wallet, from outside you can’t tell which one is “real”.

Trezor puts it plainly: a passphrase is combined with the wallet backup and opens a different passphrase wallet, and the same passphrase on a different backup opens yet another one.

According to the manufacturer, Trezor Safe 3 supports entering the passphrase directly on the device (“on-device entry”). That matters: the password then doesn’t pass through the keyboard of a computer that might be running a keylogger. If your model offers this option, use it. Typing on a computer carries more risk, because the whole system sees the password.

What a passphrase doesn’t give you

• It doesn’t replace a PIN. A PIN protects the device, a passphrase affects the key. It makes sense to have both.
• It doesn’t protect you from a scammer who tricks the password out of you. It’s a secret just like the phrase.
• It doesn’t have to be a word. The name “25th word” can mislead, because the password is any string of characters you make up yourself, not an entry from the BIP-39 word list.
• It doesn’t detect errors. We write about this below at more length, because it’s the source of most losses.

The risk of loss: a forgotten passphrase means no access

Trezor describes this without softening it. The passphrase isn’t stored on the device or in the app, so “nobody can check or reset it, Trezor support included”. In addition:

• one character changes the wallet. A wrong capital letter or a trailing space doesn’t raise an error, it opens a different wallet, usually an empty one;
• you can’t change a passphrase or remove it from a wallet. You can move the funds to another wallet, but that’s an ordinary transaction with a network fee, and the old wallet still opens with the same password;
• if you lose the password, you lose everything behind it, because the phrase alone isn’t enough.

Three rules follow, and we apply them with every client:

1. The password must be recoverable. Write it on paper or steel, separately from the phrase. Trezor recommends keeping the passphrase apart from the backup and from the device, and not storing it digitally.
2. Test it. After setting it up, deposit a small amount into the wallet with the password, restore the wallet from scratch (phrase plus password) and check that the amount is there. One test a year is enough.
3. Choose a password you can write down and read back. No exclamation marks, no special national characters and no double spaces unless you’re sure you’ll write them down exactly. A password from memory without a backup is a risk, not a saving.

The wallet is empty after restoring: what to check

This happens most often and usually causes panic. An empty wallet doesn’t prove the funds are gone. First check that you’re typing the right passphrase.

1. Write down what you’ve already tried. Trezor advises keeping a list of variants so you don’t repeat the same attempts.
2. Type the password from the paper copy, not from memory. Don’t correct it “by eye”.
3. Check capital letters, spaces at the start and end, and special characters. One character gives a different wallet.
4. Make sure you’re using the same phrase. The same password on a different phrase opens yet another wallet.
5. Check whether you used several passwords for different wallets earlier.

If nothing helps, contact the device manufacturer, but don’t expect a miracle. If the password isn’t written down anywhere, nobody can help you guess it.

How to choose a password you can write down

A good password is one you can reproduce in five years without a mistake. A few rules:

• Longer beats harder. A few unrelated words or a sentence is easier to write down than a short string of characters, and harder to guess.
• Avoid data the people around you know: first names, birth dates, pet names.
• Avoid characters that are easy to confuse when writing by hand (O and 0, l and 1), and accented or other non-English letters if the same record has to work on a different keyboard.
• Don’t write the password on the same medium as the phrase.
• Write it twice, in two places, and check with a recovery test that the record is correct.

Passphrase and inheritance: what breaks

So far we’ve talked about you. Now about your family.

1. Your family doesn’t know a passphrase exists. They find the phrase, restore the wallet, see zero and decide there was nothing there. The real wallet sits behind a password nobody mentioned. It’s the same mistake we describe in the guide what happens to your bitcoin when you die: the funds are there, but nobody knows to look for them.
2. The password lives only in the owner’s head. When the owner dies, it goes with them. It can’t be recovered, just as it can’t while you’re alive.
3. A decoy wallet clouds the picture. A small amount in the wallet without a password is meant to make theft harder. For heirs it becomes a trap, because “that’s all there is” sounds believable.
4. The phrase and the passphrase are kept together. Then the protection from the passphrase is only apparent, and you still carry the risk.
5. Several passwords, several wallets. Your family doesn’t know how many hidden wallets sit behind one phrase. You can’t check that from outside.
6. Combined with a split phrase. If the phrase is split into shares with Shamir’s method and a passphrase is added on top, your family has to put together two separate secrets. Trezor states outright that funds protected by a passphrase can’t be recovered without it, even from the shares.

How to describe a passphrase in the access instructions for your family

The access instructions for your family shouldn’t contain the password itself. They should contain everything around it. Write down:

• that the wallet is protected by a passphrase, and that an empty wallet without the password isn’t the whole holding;
• how many wallets with a password exist (one, two);
• where the password record physically is (for example “in a sealed envelope with the notary, [name]”);
• who may collect it and in what circumstances;
• that the password is case-sensitive and space-sensitive, so nobody corrects it “by eye”;
• which device and program to use for recovery.

Keep the password in a different place from the phrase, because a shared record defeats the point of a passphrase: whoever finds one finds the other. Best of all, keep it in a notarial deposit or in a safe held by a trusted person, and for a larger amount in two places at once. A notary will walk you through the legal rules on deposits and wills, and rules differ between EU countries, so check locally. We don’t settle them. This is not legal advice; for your own case, ask a notary or lawyer. How to build the whole set of instructions, we explain in the guide access instructions for your family: what they contain, and for storage places for the phrase itself see seed phrase: how to store it.

When not to use a passphrase

A passphrase isn’t for everyone. Skip it if:

• you don’t have a tested way to write down and read back the password. No backup is worse than no passphrase;
• your family won’t be able to use it even with instructions. A simpler setup that survives beats a safer one that doesn’t;
• the amount is small compared with the effort and the risk of a mistake;
• you haven’t yet practised restoring an ordinary wallet. Add layers one at a time, not all at once;
• you’re planning a 2-of-3 multisig wallet, which already spreads the risk across keys. Adding a passphrase to each of them makes the setup hard for your family, so do it on purpose or not at all.

A passphrase makes sense with a larger amount, when you worry that a stranger could reach the place where your phrase is kept, and when you have a safe way to pass the password to your family.

Decision summary

Situation	Passphrase?
Small amount, phrase in a safe, technical family	Usually no
Larger amount, phrase in a place strangers could reach	Worth considering, with a backup of the password and a test
Large amount, family doesn’t know crypto	First a simple setup and instructions; a password only if your family can manage it
You already have a split phrase or multisig	First check that the extra layer won’t make access harder for your family

If you want your family to be able to regain access without being told your secrets today, we offer it as a service: access instructions for your family. We don’t see your phrase or password, we only describe where things are and what to do.

Accurate as of 19 October 2026. The rules described apply to Trezor devices and the BIP-39 standard. Before using a passphrase on other hardware, check the manufacturer’s documentation.