ue to incorrect storage of passwords for cryptocurrency wallets, cases of theft of coins are becoming more frequent, and the lack of a backup leads to the loss of funds by one’s own mistake. To avoid such situations, you must choose one of the methods for storing keys and backups securely.
What to keep?
Almost any cold local storage has a backup feature that you need to take advantage of. The backup is a dat or json file. Local wallets such as BitcoinCore provide a wallet.dat file as a backup, which is the only recovery key in case of loss of the master password or physical damage to the disk. Local storages must be encrypted, so a cipher for entering the wallet program is also added to the list of passwords.
It turns out that the owner of the cryptocurrency is obliged to reliably protect not only symbolic passwords and addresses, but also individual files. Let’s not forget about two-factor authorization for exchange wallets, which requires storing backup QR codes in image format. As a result, the complete list of files for storage can grow to impressive sizes:
Public key in text format of 34 characters (each cryptocurrency can have its own format).
The 51 character WIF private key is the most important element.
Password to enter the wallet program.
Backup copy in text format or dat, json formats.
A backup copy of the QR code screen for a two-factor authorization program backup.
First, let’s look at the basic methods for securely protecting cryptocurrency passwords.
How to store passwords correctly
The most reliable way is in the mind. The human brain is able to remember all the information it needs, including long private keys in WIF format. Unfortunately, no one can guarantee that there will be no neuronal failure or head injury. In addition, a backup of a digital file cannot be loaded into the brain, although attempts have already been made. Memory can fail any person, without exception, therefore, consider the second most reliable method – a paper crypto wallet. For convenience, any non-digital type of information storage (engraving on iron, lamination, wood carving, etc.) will be called paper.
Keeping passwords on paper is recommended in most cases. Paper eliminates the risks of virus-related software and is great for hodlers. Reliability comes at the price of convenience. The paper storage does not provide an opportunity to copy the data, which is why you will have to manually enter a long public and private key.
All necessary data can be recorded on paper in three formats:
Natural unencrypted appearance. The disadvantage is obvious – if secret information is found, the thief gets access to bitcoins.
In order to manually encrypt and remember your private key from a bitcoin wallet, you can use a trick. Let’s consider the simplest cipher using the example of a private bitcoin key in WIF format: 5KjvscgHeMpm484wtkJNrSgACEmckhHJLGFsVd3ByK5qZZXj3hS.
Suppose that the owner of the coins can easily remember two pairs of trickery: gAC – nBN; Vd3 – M5d. Then the encrypted private password will look like 5KjvscgHeMpm484wtkJNrSnBNEmckhHJLGFsM5dByK5qZZXj3hS
This method is considered reliable and everyone can come up with their own easy-to-remember algorithm. The more complicated it is, the more reliable it is. Obviously, for such a “coding” of a cryptocurrency wallet, you cannot use real words or leave any hints about the location of the deceptive symbols. For example, the insertion of the word back will be noticed instantly, after which brute-force (brute force) 4 characters will not take much time and the bitcoins will be transferred to the attacker’s account.
Never use words or phrases!
It should also be remembered that the following characters are not used in the WIF format:
O (capital O);
l (small L);
I (big i);
“\ +” And “/”.
If you add these characters to your encrypted private key, the thief will get a bold hint to guess the password. Another important rule is that every WIF key starts with the number 5, so it should always be left as the first character. It is also not recommended to use logical encoding methods such as adding 1 to each digit, replacing letters of the previous alphabetically, etc.
QR code. The printed QR code is more difficult to encrypt, for which you have to resort to third-party services. Instead, the picture provides convenience, since the need for manual input of identifiers disappears.
It is not recommended to use online cryptocurrency key generators. Use only official software.
As a result, the keys needed to access the coins are encoded on paper, but how to store the backup files?
How to store backups
You can restore access to coins in the event of a hardware failure of the local wallet using the wallet.dat files. The required backup file is located at C: \ Users \ YourUserName \ Appdata \ Roaming \ Bitcoin. In addition to Bitcoin, the path is also relevant for other local crypto storages. In the case of two-factor authentication on a hot wallet, you must save a backup of the QR code or secret key.
You need to store the backup on a separate device that never connects to the Internet in order to protect against phishing. The most suitable option is a flash drive.
Next, the owner of the coins must set a password for the archive with a backup. You can write it down on paper and encrypt it using the manual method described above.
As a result of all the actions taken, the owner of the coins remembers how to decrypt his password from a paper cryptocurrency wallet. The backup is stored on a separate device without internet access and is also encrypted with a password, the decoding method of which is in the owner’s memory.
You don’t have to use manual encryption, then you will have to use third-party programs to encrypt passwords or completely abandon encryption and hope for the absence of thieves. In this case, all passwords and backups can be stored in two copies on two flash drives without any ciphers.