What does setting up a Trezor actually do?

Question

About a month ago, I set up my Trezor device: set the device label, wrote down the recovery seed, set the PIN, and added a passphrase. But, I never sent any money to it.

What did I do? Did I basically just use my Trezor to generate a random number?

I'm asking because I lost my PIN, and I left my recovery seed in plain view, so I'm concerned someone may have seen it.

Is it OK if I just wipe my Trezor; shred my recovery seed, PIN, and passphrase; and start over? Or, will I lose more (from the initial setup) than just a random number (and the device label)?

Answer 1

Trezor does two main things.

1. It generates a wallet based on your recovery seed. The seed is your most important data as it be used to access your funds, even without a Trezor.
2. It signs transactions using signatures based on your recovery seed, without the need to expose the recovery seed to any people or software.

The seed represents your wallet, so if you're concerned it may have been compromised and never used it, you should definitely generate a new one. The Trezor provides no security if your seed has been compromised, because somebody can just load it into a different device.

Everything Trezor does is based on the seed, so as long as you never used it and are willing to generate a new one, you should be fine.

Answer 2

What did I do? Did I basically just use my Trezor to generate a random number?

In a simplified sense, yes. By resetting the device and initializing a new wallet, you will basically be creating another, new random number from which your wallet's addesses will be derived. If the first wallet you created has no coins stored in it, then there is no harm in just abandoning it for a new wallet.

Is it OK if I just wipe my Trezor; shred my recovery seed, PIN, and passphrase; and start over? Or, will I lose more (from the initial setup) than just a random number (and the device label)?

Absolutely. If you cannot access your old wallet, or feel the seed may be compromised, then this is the best course of action.

Worth mentioning: be sure to reflect and learn from this situation. If there was BTC stored on the device and (for example) your seed phrase was compromised, then it is possible your coins could have been stolen. When you reset the device and initialize a fresh wallet, be sure to carefully secure your backups!