A passphrase is an optional word or phrase added to a recovery phrase to derive a completely separate set of keys and addresses. A passphrase is combined with the recovery phrase during key derivation, producing a different master seed and therefore an entirely different wallet. The same recovery phrase paired with different passphrases produces different wallets, each with its own independent set of private keys and bitcoin balances.
Under the BIP39 standard, the passphrase feeds the PBKDF2 key-stretching function alongside the recovery phrase: the words act as the password and the literal string "mnemonic" plus the passphrase acts as the salt. Because the function accepts any input, every passphrase generates a valid seed and a valid wallet. Only the correct passphrase reaches the wallet that holds the funds. There is no error message for a wrong passphrase and no checksum to confirm correctness, which is exactly what enables the security model below.
A passphrase is distinct from a PIN or device password. A PIN protects access to a hardware wallet device itself, while a passphrase changes the cryptographic derivation of keys. If someone obtains the recovery phrase but not the passphrase, they derive a valid wallet with no error, but it is not the wallet that holds the bitcoin. The funds remain reachable only when the exact passphrase is applied, so a passphrase protects against a recovery phrase that is found, photographed, or stolen.
This property also enables plausible deniability. A holder can keep a small balance in the default wallet with no passphrase while keeping the majority of bitcoin in a passphrase-protected wallet. Under coercion, the holder can reveal the recovery phrase, and an attacker sees only the decoy balance. The recovery phrase alone gives no cryptographic way to prove a passphrase-protected wallet exists, though an attacker who knows the wallet supports passphrases may still suspect one.
You must remember your passphrase and store it separately from the recovery phrase. A passphrase is not written into the recovery phrase and is never backed up with the seed, so losing it loses access to those funds permanently. There is no recovery mechanism without it. A single mistyped or forgotten character (including casing, spaces, or special characters) derives a different empty wallet, and the original simply becomes inaccessible. Jade supports passphrase entry, as does the Blockstream app, for advanced users who want this layer of protection on top of their cold storage setup. The passphrase deserves the same care as the recovery phrase itself: stored securely, protected against a single point of failure, and arranged to survive the holder.