One VM per wallet, secure? cost-effective? efficient?

[metraque]

Hello Bitcoiners!

I was wondering if encrypting one lightweight Linux VM partition made with truecrypt (or other similar software) with one (just one) wallet client installed, is the most secure, cost-effective and efficient (in that order) manner to manage your wallets. I do not like those scam coins that pump and bump then dissapear, so if today I have to do this thing I'm going to store like 10 wallets from 10 cryptos in 10 different VMs  , and taking 2 backups for the most valuable ones (Dropbox, Pendrive) and 1 for the not so valuable (Dropbox).

I've heard of a host that let's you store client-side encrypted files that is widely used for this purpose, if I could remember its name!

Your help is truly appreciated. In my opinion there are no tutorials for the not so geek people out there for securing your virtual currencies, because is the most hard problem of bitcoin and all the cryptos.

Thanks!

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[deepceleron]

If you wish for uber security, a VM won't protect you from a "spy on everything you do" trojan keylogger. If you can log onto the virtual machine and operate it, so can a remote-control backdoor.

On your own computer, the biggest adversary is usually yourself; I would speculate that more people have lost virtual currency from hardware failure or misplaced early indifference than from wallet-stealing hack attempts. Therefore my first advice would be not to make things overly complicated in a way that will lose your money.

The first line of defense is to not be stupid. Web browsing on a computer with bitcoins is the biggest risk. Besides downloading "bitcoin ticker" applications that steal your wallet, browser plugins such as java, flash, and acrobat consistently have new exploits allowing arbitrary code execution, where just visiting the wrong site can get you infected. If VM is your solution, you should browse the web in VM.

The second line of defense is encrypted wallets. If your wallet data is stolen, a very long passphrase can make it virtually useless. Most naive wallet stealers don't also include keyloggers (but you will probably begin seeing these). Since you are defending against attackers without physical access, even a password taped to your monitor is better than no password.

Do not upload your data anywhere unless it is strongly encrypted, meaning with a computer-generated encryption key. Store your own wallet backups to protect against hardware failure and meth-head theft.

[swappermall]

A VM that is connected to the internet is exposed to hacking, and the fact that your computer uses VMs will not immunize it.  A cold wallet has no connection to the internet. Ever.  Keep substantial amounts in a cold wallet.  Discretionary Bitcoin used for currency needs can reasonably be kept in a wallet linked or occasionally opened to the internet, if the wallet is encrypted and redundantly backed up.  To sum up, VMs are not automatically secure.  Use hot and cold wallets after deciding the balance you want between security and convenience.