Secure Passwords and Backups - Properly Secure Your Wallet

Whether you are new to the world of crypto and wondering how to secure your wallet, or have already had a painful experience because you did not take adequate security measures: We will show you how to choose strong passwords and how to create backups in this article.

It is both vital if you want to store cryptocurrencies yourself and fulfills an important protective function against losing your money, coins or tokens.

Passwords should have a high level of complexity if possible. However, most people are too convinient to create a new password for every account or wallet. One reason for this is the fact that truly strong passwords are very difficult to remember.

Admittedly, there is the possibility to rely on mnemonic devices and, for example, modify a sentence in such a way that you can better memorize the password. Here is an example:

Sentence	Password
"Peter went with his goats to Heidi on the mountain pasture."	"P56w56w56h56g56t56H56o56t56m56p56“

As a result, the manager increases a user’s security in three areas:

1. Protection against loss of passwords through secure storage
2. Randomly generated passwords that are both longer and more complex
3. No reuse of passwords as each account gets a unique password

This password has 33 characters and all you would have to remember is the phrase, the structure and the number 56. However, you can create passwords which are much more complex than in this example, thus making them much more secure. Another challenge is the question of where and how to store the password. If you lose or forget it you might no longer have access to your cryptos.

The solution to both problems is a password manager. There certainly are differences in quality in the software that is available for purchase versus free of charge. For many end-users, these differences are ultimately just subtleties. It is much more important to use any password manager, as the software generates random passwords with much higher complexity. Moreover one can then assign a complex password individually for each user account, for each e-mail address and also for each wallet.

Once you have chosen and set up a password manager you only need to remember and write down one password, namely, the one to encrypt the manager and to be able to open it again.

In addition, depending on the software chosen, you might be required to set up 2-factor authentication for access or keep a backup of the container file. In the first case, 2FA is used because the container is stored in the cloud and in the second case there is a local copy saved by the user. And it is precisely this circumstance that leads us to our second topic.

A backup is a copy of any data set and should always be kept redundant. Redundant in this case means that there should always be more than one backup copy. Each copy should be stored on a separate disk and to top it off, these disks should not be stored in the same location.

By the way, the files you actually use do not count as a copy. Therefore, a backup is at least a 1-plus-2 solution but can also include more than two additional copies.

The reason for this strict way of thinking and behaving is to protect yourself against data loss. When you consider that in some cases a wallet can have significant financial value, it quickly becomes clear why you should not be stingy with backups.

Which devices you use, on the other hand, is not so important. Admittedly, data media also have different durability and resistance, but for home use various solutions are suitable:

• External hard drives
• USB sticks
• CDs, DVDs, or Blueray discs

As already mentioned, backup copies should be stored in different places. This way you still have access even in the case of a disaster such as a burst pipe, a fire or similar events that can result in a loss of the data.

Basically, you should back up all data that is either worth a lot of money or has a high personal value. The latter category includes family and vacation photos, for example, which are often not backed up sufficiently and sorely missed if they are lost.

For the less experienced users it is recommended to back up the entire wallet file instead of trying to export the corresponding keys. However, if you have a seed phrase for your wallet then the situation is different. If possible, the seed should only be recorded in writing and not stored unencrypted on a data carrier. With this in mind, you can make your backups with pen and paper and distribute them to various locations. You should also be careful when choosing these “storage locations” because everyone who has the seed will also automatically get access to the coins.

If you don’t know what a seed is and how best to handle it, you can learn more about seeds, keys, and how to handle them safely in our next part of the article series.