Chapter 11 · Beginner guide
Wallets and the 12 words
Your wallet holds keys, not coins
On this page 7 sections
A Pearl wallet is less like a leather wallet and more like a keyring.
It doesn’t hold money. It holds keys, and the keys unlock money that lives on the blockchain. Once that clicks, the rest of this page follows naturally.
What does a wallet actually do?
A walletWallet: Software that keeps your private keys, finds the coins they unlock and signs transactions for you. It holds keys, not coins: the coins are entries on the blockchain. does four jobs:
- It keeps your private keys.
- It watches the blockchain for outputs locked to those keys.
- It adds them up and shows you a balance.
- It builds and signs transactions when you want to pay.
Your coins are never inside the wallet. They’re entries on the blockchain. Delete the wallet app and the coins are still there, waiting for anyone who has the keys.
Where do all the keys come from?
A wallet uses lots of keys. It typically gives you a fresh address for each payment you receive, and it sends your change to fresh addresses too.
Backing up each key separately would be a nightmare. So Pearl wallets are HD walletsHD wallet: A wallet that grows a whole tree of keys from one seed, always in the same order. Pearl wallets work this way, so one backup restores every address.: they start from one random number, the seedSeed: The 64-byte number computed from your 12 words. Every private key and address in your wallet is derived from it, so backing up the words backs up everything., and grow a whole tree of keys from it, always in the same order.
Each key has an address in that tree, called its derivation pathDerivation path: The route through a wallet's key tree to one key, written like m/86'/808276'/0'/0/0 (Pearl's first receive address). 808276 comes from the letters P, R, L (codes 80, 82, 76).. Your first receiving address comes from m/86'/808276'/0'/0/0. Reading it left to right:
- 86 says these are Taproot-style keys, following a standard recipe called BIP-86.
- 808276 is Pearl’s own number. It spells PRL: in the ASCII code, P is 80, R is 82 and L is 76.
- 0 is the first account.
- 0 means receiving addresses. A 1 here would mean change addresses.
- The last 0 is the first address. The next one is 1, then 2, and so on.
Same seed, same tree, same addresses, every time.
What are the 12 words?
The seed starts life as 128 random bits. Writing that down as zeros and ones would be miserable and error-prone.
So the wallet translates it into a mnemonicMnemonic: The 12 English words a Pearl wallet shows you when it is created. They encode the random number every key comes from, so anyone who has them controls the coins.: 12 words picked from a fixed list of 2,048 English words, following a standard called BIP-39. Each word stands for 11 bits, so 12 words carry 132 bits: the 128 random ones plus 4 bits of checksum. That’s why a random list of 12 dictionary words usually isn’t a valid phrase.
The words are the seed, in a form humans can copy. The same 12 words rebuild the same keys on any computer running Pearl’s wallet software.
How should you keep them?
- Write them on paper, in order, spelled exactly as shown.
- Keep the paper somewhere safe from fire, water and curious eyes. Some people keep two copies in separate places.
- Never photograph them, store them in a notes app or cloud drive, or type them into a website.
- Never tell anyone, for any reason.
What about a password?
The wallet app also asks you for a password. That password only locks the wallet file on that one computer, so someone who borrows your laptop can’t spend.
Pearl wallets don’t support an extra passphrase on top of the words, sometimes called a “25th word”. So the rule is simple:
- Forget the password but keep the words: restore the wallet and set a new password.
- Lose the words but still have the working wallet: create a new wallet, write down its new words, and move your coins there right away.
- Lose both the words and the computer: the coins are gone for good. Nobody can recover them.
Make a guess
Your laptop with the Pearl Desktop Wallet is stolen. Your 12 words are on paper at home. Are your coins lost?
Think of your answer first, then check it.
Answer No, but move them soon.
Restore the 12 words in Pearl’s wallet on another device and your balance reappears, because the keys were never really “on” the laptop. Then send everything to a brand-new wallet with new words, because the thief has a copy of your old wallet file and might crack its password.
Which wallet should I use?
Pearl’s reference software includes two:
- The Pearl Desktop WalletPearl Desktop Wallet: The point-and-click wallet app made by Pearl Research Labs. It creates a wallet backed by 12 words and runs Oyster behind the scenes., a point-and-click app. When it creates a wallet, it shows you the 12 words, then quizzes you on words 3, 7 and 12 to check you really wrote them down. It can import phrases of 12, 15, 18, 21 or 24 words.
- OysterOyster: Pearl's reference wallet program, which runs in the background and is driven by the oystercli command line. It is derived from btcwallet, and the Pearl Desktop Wallet uses it under the hood., the wallet program that runs underneath the desktop app, which you can also drive from the command line with oystercli.
One caution if you’ve used other wallets: restore Pearl words in Pearl’s own wallet software. Pearl follows standard recipes, but its wallet inherited one quirk from the Bitcoin code it’s built on. For about 0.8 percent of seeds, roughly 1 in 125, it produces different addresses from a textbook implementation. Another program that claims compatibility might not find your coins.
What is self-custody?
Holding your own words is called self-custodySelf-custody: Holding your own keys, usually as your 12 words, instead of trusting an exchange or another company to hold them for you.. Nobody can freeze your coins or lose them for you, but nobody can rescue you either.
The alternative is letting a company, such as an exchange, hold the keys for you. That’s convenient, and it means trusting that company completely. Either way, it helps to know which one you’re doing.
- Words generated
- 12
- 128 random bits plus a checksum
- Extra passphrase
- none
- First address path
- m/86'/808276'/0'/0/0
- Pearl coin number
- 808276
- P, R, L as ASCII codes
- Extended keys
- zprv / zpub
- mainnet
- Address type
- Taproot (prl1p…)
Twelve words, carefully kept, protect your coins against almost everything. The next page looks at the one threat people worry about for the long term: quantum computers.