Short version. If your Bitcoin setup uses multisig, Taproot script paths or a Miniscript inheritance policy, your recovery phrase alone is not a complete backup. You also need the output descriptor, with its checksum. And if you ever change the policy, the new descriptor is a different wallet address, so it must be backed up too.
A restore drill that found only 15 of 21 BTC (regtest)
On a Bitcoin Core 31.1 regtest network (no real money) I funded one wallet across three different descriptors: 15 BTC under the original policy and 3 BTC under each of two variants. The original wallet showed 21.0 BTC. Then I restored a brand-new empty wallet from only the original descriptor (rescan from the beginning). It saw 15.0 BTC in 3 UTXOs. The other 6 BTC sat at addresses that only the two other descriptors could derive, so the restored wallet could not see them.
A blank wallet with no descriptor at all saw 0.
Why this happens
- The seed (or key) is only one ingredient. The policy (which keys, thresholds, time-locks) decides the script and therefore the address.
- A different policy means a different script, a different address and a different descriptor, even with the same keys.
- Without the descriptor, software cannot know which addresses to look at.
The checksum matters, and it is checked
Descriptors end with an 8-character checksum (BIP-380). On Bitcoin Core 31.1, importing a descriptor with a wrong checksum is rejected with:
Provided checksum 'aaaaaaaa' does not match computed checksum '…'. That is exactly the protection you want against a typo in a handwritten backup. Not every library enforces it, so verify with the software you will actually use.
What to store
- Seed(s), on paper or metal, in separate places.
- Every descriptor you ever funded, with checksum. Add the new one whenever the policy changes.
- xpubs with origin info (
[fingerprint/path]xpub…) and the software name and version. - A short written note for your heir. Never put the seed in that note.
- A restore drill once a year with a small amount or on a test network.
Limits
Regtest with fake coins, one node, Bitcoin Core 31.1. Not investment, legal or tax advice.