The next step involves creating a passphrase. This prevents you from getting your funds stolen if someone gets access to your device and its PIN or to your 12-word backup.
What is a passphrase?
It acts as a password that you add on top of your wallet backup (12-word seed phrase).
You can create as many passphrase-protected wallets as you like, with each new passphrase generating a completely new wallet.
It serves to protect your funds in case your 12-word backup is compromised (stolen, someone else sees it), since it is required to gain access to your funds.
The default wallet does not have a passphrase, adding one gives you plausible deniability, since little to no funds can be held on the default wallet, with the majority held on the passphrase-protected wallet.
If someone comes into contact with your 12-word seed or digital backup, they won’t be able to steal your funds since they also need the passphrase to unlock the funds.
Whoever has access to both the passphrase and the 12-word seed phrase can steal your funds.