Two Powerful Protections, Two Ways to Lose Everything

Elsewhere on this site we recommend two advanced protections:

• A passphrase-protected hidden wallet, so that someone who finds or forces out your recovery phrase still can’t reach most of your funds. Related: Crypto Has Gone Physical: Wrench Attacks, Home Invasions, and What European Holders Should Do
• A multi-share backup, so that no single piece of paper or metal can lose — or give away — your whole wallet. Related: What Happens to Your Crypto When You Die

This is the how-to for both. One warning first: these features are powerful because nobody can undo them. There is no reset and no support desk. A forgotten passphrase or a lost share can lock you out permanently. Follow the verification steps; they are the difference between protection and loss.

Which Do You Need?

Our suggestion:

• Holding meaningful value at home? Add a passphrase.
• Holding larger amounts, or planning for inheritance? Use multi-share backup.
• Both? For large holdings, the combination is the strongest self-custody setup short of a multisignature wallet.

Part 1: Passphrase Wallets

How a passphrase works

A passphrase — sometimes called the “25th word” — is an extra secret added to your recovery phrase. The same recovery phrase plus a different passphrase creates a completely different wallet, with its own addresses and balance.

Three facts to understand before you start:

1. Every passphrase opens a wallet. There’s no “wrong passphrase” error. A typo just opens a different, empty wallet.
2. Passphrases are exact. Capital letters matter, and a space counts as a character.
3. Nobody can recover it. Neither Trezor nor Ledger stores your passphrase. If you forget it, the wallet it protects is gone permanently.

Choosing a passphrase

Anyone who has your recovery phrase can try to guess your passphrase. So:

• Use real randomness. Trezor recommends generating it randomly. Several random words chosen with dice from a word list work well, and are easier to write down correctly than random symbols.
• Avoid anything about you: names, dates, places, song lyrics, quotes or famous phrases.
• Make it long enough to resist guessing, but something you can write down without error.
• Write it on paper before you send any funds to the wallet.

Setting up a passphrase on Trezor

Before you begin

• Confirm your standard wallet backup first. If your recovery phrase is wrong, your passphrase wallet is lost along with everything else.
• Write the passphrase on paper, separately from the recovery phrase.

Turn the feature on

• Desktop (Trezor Suite): Settings → Device → turn on “Use Passphrase wallets.”
• Mobile: Device settings → Wallet backup & passphrase → turn on the same option.

Open the passphrase wallet

• Desktop: open the wallet switcher at the top left and choose the passphrase wallet option.
• Mobile: open the wallet menu and select Open passphrase.

Enter it on the device where you can

Typing the passphrase on the Trezor itself keeps it off your computer or phone, which matters if that machine is ever compromised.

• Safe 7, Safe 5, Model T: use the touchscreen.
• Safe 3: use the buttons.
• Model One: has no on-device entry, so you have to type it in Trezor Suite.

Limits: standard characters only, up to 128 characters on the Safe models and Model T (50 on the Model One).

Verify it before you fund it

This is the step that prevents permanent loss. It is Trezor’s recommended method.

1. In the new passphrase wallet, note the coin and the last 8 characters of its first receive address. Write them on the same paper as your passphrase.
2. Close both wallets.
3. Reopen the passphrase wallet using only your written copy of the passphrase.
4. Compare the receive address shown on the device with what you wrote down.

If they match, your written passphrase reproduces the right wallet. If not, stop and work out why before you send anything.

Then send a small test amount, repeat the check, and only then move larger funds. You can repeat this check at any time — it belongs in your quarterly audit. Related: Revoke Day: The 10-Minute Quarterly Crypto Security Audit

If a passphrase wallet ever appears empty, there are two likely causes: the passphrase was typed slightly differently, or your funds are on a network you haven’t enabled yet. Check both before you panic.

Setting up a passphrase on Ledger

Ledger offers two ways to use a passphrase. Both are set up on the device itself.

Option 1: Temporary passphrase

You enter the passphrase each time you want the hidden accounts. It stays active only while the device is on, and the device returns to your regular accounts when it switches off.

Best for: maximum discretion. Nothing on the device indicates hidden accounts exist.

Option 2: Passphrase attached to a second PIN

You set the passphrase once, then choose a second PIN. At start-up, your normal PIN opens your regular accounts and the second PIN opens the hidden ones.

Best for: convenience, if you use the hidden accounts often.

Warning: three wrong attempts at the second PIN reset the device. You’d then recover from your recovery phrase — and still need the passphrase to reach the hidden accounts.

Rules on Ledger

• Up to 100 characters, including upper and lower case, numbers and symbols. It is case-sensitive.
• Hidden accounts start empty. Setting a passphrase doesn’t move your existing funds.
• Ledger doesn’t store the passphrase. Forgetting it means permanent loss of those accounts.
• Enter it on the device, never on a computer or phone.
• Touchscreen models — the Nano Gen5, Flex and Stax — make entry easier. Ledger publishes the exact menu steps for each model on its support site.

Verify before funding

The principle is the same as on Trezor. With the hidden passphrase active, add an account in the Ledger Wallet app (formerly Ledger Live) and note the coin and the last 8 characters of its first receive address. Switch the device off, re-enter the passphrase from your written copy, and confirm the same address appears. Then send a small test amount.

Using a passphrase as a decoy

If you’re ever forced to hand over access, a passphrase lets you give up the standard wallet while the hidden one stays hidden.

That only works if the standard wallet is believable:

• Keep a plausible amount in it — an empty wallet invites the question “where’s the rest?”
• Use it now and then, so its transaction history looks lived-in.
• Don’t keep anything that refers to the passphrase near your device or recovery phrase.

Related: Crypto Has Gone Physical: Wrench Attacks, Home Invasions, and What European Holders Should Do

Where to keep the passphrase

• Never with your recovery phrase. Together, they unlock everything.
• Never typed into a computer, phone, note app or password manager that syncs.
• Written on paper or metal, in a different place from the recovery phrase.
• Documented for your heirs. Record that the hidden wallet exists, and who holds the passphrase — not the passphrase itself — in your inheritance inventory. Otherwise your family will restore your recovery phrase, find the decoy, and never know the rest existed. Related: What Happens to Your Crypto When You Die

Part 2: Multi-share Backup (Trezor)

How it works

Multi-share backup (based on Shamir’s Secret Sharing, also called SLIP-39) splits your wallet backup into several shares. You choose:

• How many shares to create — from 1 up to 16
• The threshold — how many shares are needed to recover the wallet. A threshold of one isn’t allowed.

Any combination of shares that meets the threshold restores the wallet, in any order. Fewer shares than the threshold reveal nothing useful.

Each share is 20 words when created in Trezor Suite. Advanced tools can produce 33-word shares.

Supported devices: Trezor Safe 7, Safe 5, Safe 3 and Model T. Multi-share-compatible backups have been the default on the Trezor Safe family since June 2024.

Choosing a configuration

The rule of thumb: the threshold should be high enough that one stolen share is useless, and low enough that losing one share isn’t a disaster.

Creating a multi-share backup

If you’re setting up a new wallet

Choose multi-share backup during setup in Trezor Suite and follow the on-device steps. Write each share down — on paper or on a multi-share metal plate — and verify each one as prompted. Related: Metal Seed Backups: What Survives Fire, Acid and a 20-Ton Press

If you already have a 20-word backup

You can upgrade without moving funds:

1. In Trezor Suite, go to Settings → Device → “Create Multi-share Backup”.
2. Follow the on-screen and on-device steps.
3. You get a new multi-share backup for the same wallet and accounts.

If you have a 12- or 24-word backup

This kind of backup (BIP39) cannot be converted. You need to:

1. Verify your existing backup with a dry-run recovery check.
2. Wipe the device.
3. Set up a new wallet with a multi-share backup.
4. Move your funds from the old wallet to the new one, starting with a small test amount.

Wallets created with the older 20-word format before June 2024 also need a new wallet and a transfer of funds.

Warnings that catch people out

• Your old backup still works. Upgrading a single-share backup to multi-share does not cancel the original. If the original is ever found, your funds are still at risk. Destroy it only after you’ve confirmed the multi-share backup recovers your wallet.
• Shares from different backups can’t be mixed. Each share only works with the others from its own set.
• Identify sets by their first two words. All shares from the same backup start with the same two words.
• You can’t add an old single-share backup to a new multi-share set.

Storing the shares

• Different places, different people. Shares kept together are no better than a single backup.
• Label each one with a note explaining what it is, how many shares are needed, and whom to contact. The note must never contain another share’s words.
• Use metal for durability. Trezor’s Keep Metal multi-share edition has space to record the total number of shares and the threshold.
• Test a recovery before you rely on it, and check every year that the shares are where you think they are.

Ledger users: what about splitting the backup?

Ledger devices don’t offer this kind of multi-share backup. Ledger’s own alternative, Ledger Recover, is an optional paid service that encrypts your recovery phrase, splits it between custodians, and uses identity verification to restore access. That is a different trade-off: you add third parties and identity checks to your backup. Whether that suits you depends on how much you trust those parties. Related: The Ledger Recover Controversy Explained

Another option for either brand is a multisignature wallet, where several devices must approve each transaction. It’s more complex, and covered separately.

Part 3: Using Both Together

A passphrase on top of a multi-share backup gives you protection on two fronts:

• Against loss: you can lose shares up to your margin and still recover.
• Against discovery: anyone who gathers enough shares still finds only the standard wallet without the passphrase.

Rules for the combination:

• Store the passphrase separately from every share.
• Document the structure for your heirs: how many shares exist, where or with whom, the threshold, that a passphrase exists, and who holds it.
• Test the full recovery once, with a small amount, before trusting it with significant funds.

Mistakes That Lock People Out

• Funding a passphrase wallet before checking it, then finding the written passphrase doesn’t reproduce it
• A trailing space, or automatic capitalisation when typing on a phone
• Forgetting which wallet holds the funds — keep a note of which passphrase wallet is the real one
• Destroying the old backup before confirming the new one works
• Choosing 3 of 3, or any setup where losing one share is fatal
• Storing shares together, or with the passphrase
• Not telling anyone the hidden wallet or the shares exist

Frequently Asked Questions

Can Trezor or Ledger support recover my passphrase?
No. Neither company stores it. Trezor states plainly that its support team cannot recover a passphrase.

What happens if I forget my passphrase?
Funds in that passphrase wallet are permanently inaccessible. Your standard wallet, protected only by the recovery phrase, is unaffected.

Can I have more than one passphrase wallet?
Yes. On Trezor, every different passphrase opens a different wallet. Keep careful records of which one holds what.

Is a passphrase the same as a PIN?
No. The PIN unlocks the device. The passphrase changes which wallet the recovery phrase opens.

Does multi-share backup protect against someone forcing me to unlock my device?
Not on its own: an unlocked device can still sign transactions. That’s what a passphrase decoy is for.

I have a Trezor with a 24-word backup. Do I have to move my funds to use multi-share?
Yes. A 24-word backup can’t be converted, so you set up a new multi-share wallet and transfer your funds to it.

The Bottom Line

A passphrase protects you against someone else finding or forcing out your recovery phrase. A multi-share backup protects you against losing it — and against any single copy being enough. Together, they’re the strongest self-custody setup available without multisig.

Both are unforgiving. Write it down, verify it before you fund it, test the recovery, and document it for the people who may need it after you. Done that way, they’re the best protections a hardware wallet offers. Done carelessly, they lock your crypto away from everyone, including you.

Transparency: TrueToCrypto may earn affiliate commissions from links in articles. This article is educational and is not financial or security consulting advice. Always follow your wallet manufacturer’s current official instructions, which take precedence over this guide.

Setup steps from Trezor’s official guides (passphrase wallets; upgrading to Multi-share Backup; What is Shamir backup) and Ledger Academy (passphrase). Verified October 2026; menu names change between software versions.