Signing in with a seed phrase: an account record, not a wallet for savings

Why a seed phrase instead of an email

An email address ties an account to a person and to a provider that can read, track or close it, and most sign-in systems now end in an identity check. A seed phrase proves control of a key without saying who holds it. There is no password database to breach and no address list to sell, and nothing about the account needs to be known by anyone but its owner.

How the keys and the encryption work

• The phrase stays in the browser. It is used on the page to derive keys and is never sent to the server or saved.
• Two keys come from it. An identity key signs the server's sign-in challenges; a separate wrapping key unlocks the account's data key. Both sit on a derivation path far outside the range wallets scan, so they are never an address anyone sends money to.
• The data is encrypted before it leaves. A random data key encrypts the portfolio, watchlist and settings with AES-GCM on the page. The server stores that ciphertext and the wrapped data key, and holds no key that opens either.
• Recovery is optional. A recovery passphrase, strengthened with 600,000 rounds of PBKDF2, can wrap the data key a second time. Without it, losing the phrase means losing the synced copy; the copy in the browser stays as it is.

The design has not been audited by an outside firm. The code that does all of this runs in the page and can be read there by anyone, which is the point: the claims above can be checked rather than believed.

Why savings never belong there

A seed phrase that signs in to a website has been typed into a website. Even when the site never sends it anywhere, the phrase has passed through a browser, an extension list and a clipboard that the owner does not fully control. That is an acceptable risk for a phrase made for the purpose, and an unacceptable one for the phrase that guards someone's savings.

So the rule is simple. Create a new phrase on the site for the account; it is generated in the browser and holds nothing. If you sign in with an existing phrase, use one kept for small amounts only. A CoinSpectrum account works with an empty wallet, and nothing on the site ever asks for a deposit.

If paid products open later

Paid API tiers are planned and not open; no payment is taken today. If they open, the same account could pay for them in Bitcoin Cash, which is the one reason a balance might ever sit in it: a small spending amount for a subscription, the way a wallet in a phone holds pocket money and not savings. That is a convenience the account may offer, not a requirement, and it never changes the rule above.

Questions