Before this people used to backup each individual key, and there was no restore function.
Also, the 1st wallet to implement "mnemonic" backups, way before BIP39.
Electrum wallet was announced on 5 November 2011 as a Lightweight Bitcoin Client.
It was the 1st modern Bitcoin wallet and brought features that improved the UX by 100x.
You did not have that many options back then.
You either use Bitcoin Core(not called Core at the time) or some custodial wallet.
Electrum introduced this server model where it's non-custodial, and you just ask the server for information about balances and broadcast TXS.
(there is a privacy trade-of)
Back then your Bitcoin wallet would generate individual keys for each of your addresses.
You may think, it's still doing that now, true.
But there was no relation between the keys.
And I do mean private keys, there were no English words associated with them.
If you restart your wallet you get new keys every single time!
Hence NONdeterministic.
The #Bitcoin community was aware of this YUGE pain and solutions were being discussed as early as June 2011
This resulted in the widely used BIP32 created in February 2012.
The 1st version of Electrum mnemonic backups worked similarly to BIP39.
- 12 words encoded using a 1626-words-dictionary.
- words chosen from poetry list on Wikipedia.
- encoding is designed, to avoid conflict with a patent.
- words were chosen to be easier to remember.
Meanwhile, in 2013 BIP39 was created and used together with BIP32.
Separate BIPs for each type of script/address, and the same seed can be used ever with multiple coins!
Deterministic wallets are a thing!
But there is there is a catch.
There are a LOT of derivation paths for each type, and new types may be introduced.
BIP39 encodes the secret in English words, but no information about the paths.
This is problematic, as different wallets use different derivation paths, so to be 100% sure of recovery in the distant future you need to back also derivation paths.
Plus you can't upgrade this standard.
The authors made this design choice on purpose.
A flaw in my opinion.
In 2015, with Electrum 2.0 a new and improved seed system was introduced.
(still used today)
Addressing the shortcomings above:
- it had a versioning system
- allows updates
- not dependent on any particular dictionary
However, how many of you are using Electrum seeds?
BIP39 grew more popular and became the de facto standard.
Even though most people think "just the words" are a great backup, they could not be more wrong.
Not all wallets use the same derivation paths!
The fact that this website exists, proves the flaws in BIP39.
https://walletsrecovery.org/
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