NEED HELP PLEASE! EXPLAIN IT TO ME Wallet Security and PW Strength

[campycoin]

OKay, here's my question and I would appreciate someone explaining it like I'm a 5 year old because obviously that is my current comprehension level

-- a little background before my issue:

Been playing with bitcoins for a while and have had some from earlier days and also bought a few when they were $400.  Had wallets at blockchain.info and coinbase.  I buy all my coins from coinbase, it is straight forward and with 2 layer sign on - I feel it is safe.  Also, they have added two layer sending for any amount you decide, so currently, even if my coins are stolen they would need that auth code and could only send .2 btc a day and I would know, so Coinbase is working well.

A while back, I got multibit and I have NOTHING BUT GOOD THINGS TO SAY!  I HAVE ALWAYS LIKED IT AND HAVE HAD ZERO ISSUES.  I even used multibit to kind of "learn" about bitcoin, sending small amounts to different wallets, and checking transactions at blockchain and it taught me a lot.  I even created wallets on a usb and sent my larger amounts there.  So, all is well.  I have some usb wallets.  Some wallets on multibit, some on blockchain and some on coinbase.  I've felt fairly proud of my ability to keep it all in check.

But of course I had to go and F it all up which has led me to my question  re: security

I have three wallets on multibit that is on my PC.  Two have value, one is empty.  Wouldn't you know that for the mother f'n life of me I can't remember my password for either.  I thought I did but it is not working.  I have sat and typed numbers in and nothing.  So reading the forum and help, the consensus answer to this is "IF YOU LOSE YOUR PASSWORD YOUR BTC IS GONE.  NO ONE KNOWS IT AND NO ONE CAN RETRIEVE IT"

Okay, totally understood.  I'm a jackass who changed passwords on New Years Eve like an idiot, and if I have to take a loss, I'm willing to do so since I've taught myself the importance of keeping my passwords.  One of those that I didn't write down because in my head I said "Oh I will remember that"  WRONG  So, here is my question...

Why do we need to be so careful with out wallets on the computer if without my password, they are impossible to retrieve?  For example, if I use lastpass to geberate a password, or say I use a 20 letter password (only using lowercase) in order for my password to be stolen, it would take 60 billion years with the best Brute Force Attack, so why would I not  just do this? 

My question is, if I have a strong enough password (say 20 character w/ upper/lower/num/sym ) do I need to worry about security even if I have wallets just sitting on my desktop?

Please someone explain this to me, and is my btc really unrecoverable?

[jim618]

With a long enough password you are making it very difficult for someone to brute force it.

However if someone can get a keylogger onto your machine it does not matter how long your password is as they'll get it all. If they also get your wallet file then your bitcoin are gone.

Your password isn't logged anywhere and isn't sent anywhere (for security reasons) so if you do not know it, nobody does.


Unfortunately people and passwords don't go very well together. We forget them.

For MultiBit HD we are improving things so that:
+ you'll have a seed phrase from which the bitcoin addresses are generated. You'll be able to recover the basic wallet from the seed.
+ we'll store the wallet password encrypted with a key derived from the seed. That way if you forget your password but still have your seed you'll be able to recover it.
+ you'll be able to store an encrypted wallet (totally opaque) + encrypted contacts in a 'cloud backup directory' so that it will sync using SpiderOak or whatever. You'll need the seed to decrypt this.
+ there is a little icon on the password field so that you can switch it from "*********" to see the password text and verify it is what you expect. This is so that you can double check the password to avoid "double typos" in both the password and repeat password fields.


We also plan to support Trezor which should up the securty ante as then the desktop will not be doing the signing. There won't be any private keys on the desktop machine for malware to steal.

[RippleAway]

+ you'll be able to store an encrypted wallet (totally opaque) + encrypted contacts in a 'cloud backup directory' so that it will sync using SpiderOak or whatever.

What's the difference to just storing the current MultiBit wallet directory in a cloud backup directory?

[jim618]

Currently only the private keys are encrypted, so if you sync the current multibit wallet directory you tell the cloud all of your transaction history, your current wallet balance and all the labels you have put for all your contacts.

I think we can assume now that anything other than opaque encryption is being sniffed on by somebody.