Ever wonder why you’re not given a bunch of random words?

Introduction

Most crypto wallet users are probably well accustomed to being given 12 or 24 mnemonic words during the initial wallet setup. You know those random words that are required for you to write down first on a provided piece of paper, re-confirm them in your wallet, and then store them in a safe place? It’s probably not easy to forget about this elongated process considering that many wallets adamantly remind you to hold onto them for dear life.

Those random mnemonic words are essentially your private keys. You can use them as a backup in the event you lose your actual interfacing wallet. All you would need to do is take those mnemonic words and import them into a different wallet interface.

So considering how ubiquitous mnemonic words, aka mnemonic seed phrases, have become, how come the Ballet wallet doesn’t provide you with them?

The short answer is, BIP39 doesn’t allow for a double-blind bifurcated key generation process from the onset without having to initially instantiate the single raw private key.

But let’s first explain more as to what makes them different.

Major differences between BIP38 and BIP39

The major difference between the two is the way encrypted private keys are generated, encoded, and stored.

The BIP38 standard (under the Encryption when EC multiply mode is used) allows two parties (Party A and Party B) to partake in the creation of the encrypted private keys. One party would hold the first part called the ‘passphrase entropy’ and the other party would hold the second part known as the “private key entropy” in the format of 58 characters base58, starting with ‘6P’.

Party A starts by creating a randomly generated passphrase entropy and some ‘salt’ to add more entropy to the process; an intermediate_passphrase_string is then derived and handed over to Party B to generate a public address and a private key entropy. And to stress a key point here is that the intermediate_passphrase_string DOES NOT reveal the original passphrase, which is kept by Party A and is needed to decrypt the end resulting encrypted private key. This is what is meant by BIP38 being a double-blind bifurcated key generation process. The entire process does not include instantiating the full single raw private key until the user is ready to create a transaction.

The BIP39 standard on the other hand, allows for private keys to be formatted as a mnemonic code seed phrase for generating deterministic keys. Your mnemonic code seed, essentially your private key, is instantiated all at once, by one person in one location. It is not designed to be pre-generated in 2 or more components.

The below highlights the major difference between the two standards.

Why Ballet does not use BIP39

It’s prudent to think of BIP38 and BIP39 as different in terms of functionality, rather than trying to compare them in terms of which one is more secure. The BIP39 standard is essentially allowing the private key to be transformed into a more user-friendly human-readable format. Having the private keys as recognizable English words can be an easier method in recording and preventing mistakes.

The BIP38 standard on the other hand, allows for 2 different parties to partake in the key generation process without either side needing to know each other’s part of the bifurcated key. This method obviates the need to have the single raw private key instantiated at once in the beginning. As you can realize,

Comparing the two different standards in hopes of deciding which one is far more optimal or not is futile. Although both are used to create a private key, both are different in terms of the process and the reason behind the process. It would not be possible for the Ballet wallet to be what it is if we used the BIP39 standard. If we did use the BIP39 standard, our wallets would essentially replicate what other wallets require users to do and all the potential complications that come along with it.

The Ballet wallet has removed the complication that comes along with mnemonic seed words by already providing the key entropy components on the wallet upon receiving it. This is what makes the Ballet wallet “ready-to-go” and simple to use. Removing the requirement to write down 24 mnemonic words, recite it, and then find a safe storage place for it allows for a smoother user experience.

And who’s to say you can’t have a backup for the Ballet wallet? One could simply copy the passphrase entropy and private key entropy if they wanted to. But one also must be diligent about securing their backup as well.

Conclusion

So to recap, the BIP38 standard is a method to decide HOW you want the private key generated. The BIP39 standard is a method to decide WHAT format you want your private key in.

The BIP39 standard is useful for what its original purpose is intended for. The BIP38 is also useful for what its original purposes is intended for. Just to be clear, both standards are absolutely secure and nearly impossible to crack on a brute-force attempt. Although BIP39 is today’s most commonly used standard amongst many wallets, BIP38 doesn’t deserve the credit it deserves despite its nearly identical sound security it provides: and it’s the technological cryptographic cornerstone instilled in every Ballet wallet. And interestingly enough, both BIPs had multiple authors where one author, Aaron Voisine, contributed code to both BIP38 and BIP39.

Whether you are holding the BIP38 private key entropy (along with its passphrase entropy) or the BIP39 encrypted private key (in the form of human readable words), both come down to the responsibility of the user/holder of those private keys to keep them in a safe location and preferably backed up. So in either case, the proverbial “not your keys, not your crypto” are equally weighted in importance of private key security for both BIP38 and BIP39.

About us

Ballet is a U.S. company that provides simple and secure cryptocurrency storage solutions for the global mainstream market. Ballet is the team behind the world’s first multi-currency, non-electronic, physical crypto wallet. The company was founded in 2019 by Bobby Lee and an international team of cryptocurrency industry veterans. Ballet is headquartered in Las Vegas, Nevada in the United States, and has an office in Shanghai, China.

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Here’s why Ballet doesn’t use BIP39 was originally published in BalletCrypto on Medium, where people are continuing the conversation by highlighting and responding to this story.