So here's the hypothetical scenario: I have an offline wallet, duly backed up. Someone has found the backup (because I stupidly left it in a place they could find it), then they go to their own computer and restore my wallet. It's encrypted, so it will take them a while to decrypt (if at all).
But how do I know? When I check the wallet with my online Armory will it let me know that someone, somewhere, has restored my offline wallet? If there was an alert to that effect, I could very quickly transfer those BTC to another offline wallet and secure those backups better.
Is it even possible to add this as a feature? Or maybe an email address that you can input somewhere and you'll be alerted if your wallet has been restored?
Just a thought.
First of all: please keep your paper backup secure. There is no encryption on it. It's to protect you from hard-drive loss or bad memory (now had two more people email me asking how to recover their wallet after forgetting their passphrase, and I had to tell them their coins might be lost). In the future there will be more options to back up your wallets, but it's not there yet.
To answer your question: the only way you will know that someone has restored your back up is when it's too late. They will transfer all the funds from that wallet to their own wallet that you
don't have access to. By the time you realize it, you will see the target address that the coins were sent to, but it won't be an address you control. There have been attempts in the past to try to track down such thefts, but it's generally futile -- it's too easy for a thief to hide their identity and mix the coins to obscure its path out of your wallet.
I recommend keeping your paper backup in a safe-deposit box. When the new wallets are done, I will have a way to do "fragmented backup" so that the paper will be split up between, say, 5 sheets of paper, and any 3 of them will recover your wallet.
