Difference between backing up your PIN vs. Seed Phrase

A seed phrase backup compromise implies an absolute loss of funds. Regardless of protections that are in place on the wallet, if an attacker at any point in time is able to compromise the seed phrase of the wallet, there are no protections against an unauthorized transfer of assets using it.
Cypherock X1 eliminates the need to backup the seed phrase, however, someone might argue that if a person forgets the PIN set on the wallet, she will not be able to recover the assets. Until Cypherock releases the inheritance service (Q3 '23), this is unfortunately true. Since Cypherock X1 is a trust minimalized product, even Cypherock does not have a recovery mechanism to recover the user's assets. We at Cypherock advise users to back up their PIN somewhere in case they feel they might forget their PIN. A PIN backup is still significantly safer than a seed phrase backup. This is because Cypherock X1 uses a 2/5 cryptographic threshold to recreate the private key. Therefore, to access functions of the wallet with PIN protection, an attacker would have to have access to the PIN, and at least 1 X1 Vault and X1 Card or 2 X1 Cards, dramatically increasing the effort required to compromise the assets secured by a Cypherock X1.