Folks,
I would like your thoughts on how to recover from a dead pc with your bitcoins on it. Ultimately I would like to have a step by step guide for recovery of your coins if you lose your HDD etc.
Hypothetical situation is the hard drive is toast(No recovery possible). Assume Bitcoin-qt wallet. Feel free to discuss other options though.
1. What should I do before this happens?
Create backups on a regular basis. At least every 100 transactions, preferably more frequently than that. Store at least one recent backup in a secure location that is not in the same building as the Bitcoin-qt wallet.
2. I have my new pc and wallet installed, What next?
Recover your most recent good backup:
If the new wallet has no bitcoins and you haven't given any of its addresses to anyone, then replace the %APPDATA%\Bitcoin\wallet.dat file with your backup
If you have already made use of the new wallet, then you'll need to come up with a plan to maintain both wallets or to merge them by importing the necessary private keys from one into the other.
3. Is windows backup of a wallet enough?
I'd be a bit concerned about Windows creating a backup while the file was in the process of being updated. This could potentially leave it in an unusable state. Windows backup is
probably fine, but personally, I'd use the "Backup Wallet" function built into the wallet on a regular basis.
4. Can I have more than 1 copy of an active wallet? I know I can have multiple backups.
It is a bad idea to try to run multiple instances of a single Bitcoin Core wallet right now. They aren't designed for that and, if you don't know exactly what you're doing and how to manually synchronize the wallet data between them they will eventually get out of sync. This will cause unusual and unexpected behavior, which is likely to lead to mistakes that will result in permanent loss of bitcoins.
5. How do private keys work in this situation? Can I use this to recover if I have no backup of the wallet itself?
Only if you have all the private keys to all the addresses that have any bitcoins associated with them. Bitcoin-qt (also known as Bitcoin Core) creates random new private keys and addresses for you without telling you about them every time you send a transaction. If you don't have the private keys to those additional addresses, then you will not have access to much of your bitcoins. The wallet backup handles this by pre-generating the next 100 addresses that the wallet will use any time the wallet is unlocked. Therefore, the 100 addresses used after a backup (and the associated private keys) are included in the backup. This is why I suggest creating a new backup AT LEAST every 100 transactions. Since it is possible to lose a backup, for a backup to become damaged, or for you to lose track of how many transactions you've done since the last backup, it is better to create backups more often than that and the keep the most recent few.
