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beginner's guide to Bitcoin backups. +nav_order: 4 +parent: Private key management +permalink: /guide/private-key-management/backups/ +main_classes: -no-top-padding +image: https://bitcoin.design/assets/images/guide/private-key-management/backups/page-backups.jpg +--- + + + +{% include picture.html + image = "/assets/images/guide/private-key-management/backups/backups.jpg" + retina = "/assets/images/guide/private-key-management/backups/backups@2x.jpg" + mobile = "/assets/images/guide/private-key-management/backups/backups-mobile.jpg" + mobileRetina = "/assets/images/guide/private-key-management/backups/backups-mobile@2x.jpg" + alt-text = "Several devices exchanging data" + width = 1600 + height = 700 + layout = "full-width" +%} + +# Bitcoin backups + +The self-custody of Bitcoin is an important right, but also a financial responsibility that can scale from pocket money to life savings, and take practice getting used to. + +This guide is a straightforward starting point for simple Bitcoin backups, aimed at users of Bitcoin products. + +If you are a designer or developer, make sure you offer guidance to your users so they can secure their bitcoin with an appropriate backup. + + +## What are backups? + +When we talk about backups, we mean saving the information needed to restore access to a wallet outside of the application that created the private keys. Often, this will just be the [recovery phrase]({{ '/guide/glossary/#recovery-phrase' | relative_url }}) of 12 or 24 words, but can also include other information like a *pass-phrase* and [derivation path]({{ '/guide/glossary/#derivation-path' | relative_url }}). + +The main risks that backups need to protect against are: + +- Loss of wallet - you lost the device and application holding the private key +- Remote theft - your backup got discovered online by a bad actor +- Physical damage - your backup got destroyed +- Theft on discovery - your backup got discovered in person by a bad actor +- Catastrophic events - your backup location got destroyed +- Inheritance loss - next-of-kin were unable to access your wallet + + +## Backup levels, basic to advanced + +A basic backup can be done in a few minutes, while more advanced setups can require more time and effort, like the purchase of dedicated material. + +Let’s look at some real life examples of backup methods for single-key wallets and what they protect against. + +
+ +{% include image.html + image = "/assets/images/guide/private-key-management/backups/backup-table.png" + retina = "/assets/images/guide/private-key-management/backups/backup-table@2x.png" + alt-text = "Table of backup levels" + width = 904 + height = 625 + layout = "full-width" +%} + +{% include tip/recommendation.html %} + +Level 0 and 1 are good when getting started, and require very little effort. + +Level 2, 3 or 4 are recommended for storing larger amounts. + +{% include tip/close.html %} + +
+ +#### Level 0 +## Encrypted cloud backup + +By storing the recovery-phrase in an online location that is encrypted (not in plain text) and hard to access by anyone other than yourself, you are protected against *loss of wallet*. This is the absolute minimum you should do and only takes a few minutes. + +{% include image.html + image = "/assets/images/guide/private-key-management/backups/cloud-backup.jpg" + retina = "/assets/images/guide/private-key-management/backups/cloud-backup@2x.jpg" + alt-text = "Encrypted cloud backup" + width = 800 + height = 420 +%} + +**Do** +- Use an encrypted password manager like 1Password, LastPass, iCloud Keychain +- Alternatively, use a wallet application with automatic cloud backup + +**Don’t** +- Screenshot the recovery-phrase and save it in Google Photos, iCloud photos +- Write down the recovery-phrase in plain text on your device, Google Docs etc. + +**Suitable for** +- For small amounts (less than a months salary) +- When you can't wait to set up a new wallet until you are at home + +
+ +#### Level 1 +## Single paper backup + +By storing the recovery-phrase written down on paper in your own home you have protected against *loss of wallet* and *remote theft*. + + +{% include image.html + image = "/assets/images/guide/private-key-management/backups/paperbackup.jpg" + retina = "/assets/images/guide/private-key-management/backups/paperbackup@2x.jpg" + alt-text = "24 word paper backup" + width = 800 + height = 508 +%} + + +**Do** +- Write the recovery-phrase with the words numbered, using permanent ink on card +- Store it in a location where it is unlikely to be found by a bad actor +- Document or tell next-of-kin where the backup can be found + +**Don’t** +- Scribble the recovery-phrase on a scrap of paper using a pencil +- Stick it on the fridge, or other visible locations + +**Suitable** +- For small amounts (less than a months salary) +- When you are setting up a new wallet at home + +
+ +#### Level 2 +## Single metal backup + +By storing the recovery-phrase on metal in your own home you have protected against *loss of wallet*, *remote theft* and *physical damage*. + +The best metal backup solutions are resistant to most physical damage, including fire, acid and high pressure. + + +{% include image.html + image = "/assets/images/guide/private-key-management/backups/metalbackup.jpg" + retina = "/assets/images/guide/private-key-management/backups/metalbackup@2x.jpg" + alt-text = "Metal backup" + width = 800 + height = 440 +%} + + +**Do** +- Order a dedicated metal backup product, recommendations can be found [here](https://jlopp.github.io/metal-bitcoin-storage-reviews/) +- Follow the instructions and make sure the phrase is indented, etched, engraved or set properly +- Store it in a location where it is unlikely to be found by a bad actor +- Document or tell next-of-kin where the backup can be found + +**Don’t** +- Skip ordering a dedicated product, invent your own metal backup solution + +**Suitable for** +- Amounts above your monthly salary, but less than half your annual salary + +
+ +#### Level 3 +## Single backup with discovery protection +The previous offline backups have one flaw in common - if discovered by a bad actor, your funds can be stolen. + +To protect against this *theft on discovery* risk, a *pass-phrase* can be added to the recovery-phrase. This pass-phrase is sometimes called an extra word, or the 13th/25th word. + +While this level provides more protection, it also adds complexity to your backup setup. For most beginners storing small amounts it might not be worth the effort from the start and can be a later consideration should the funds grow. + +Technically, all recovery-phrases have a pass-phrase. If it's not set by the user, an empty string (“”) will be used by default. This means that using the recovery-phrase with or without the user-defined pass-phrase will recover two DIFFERENT wallets. + +If a bad actor discovers only the recovery-phrase, they will find an empty wallet. Alternatively, one can deliberately leave a small amount of bitcoin in this wallet as a honey-pot, and monitor it for any withdrawals to know if it has been discovered. + +To provide protection against *theft on discovery*, the pass-phrase should be stored separate from the recovery-phrase. + +Since adding a pass-phrase will generate a different wallet, it is best to add it when first creating the wallet, and before storing any bitcoin in its addresses. + +It's worth noting that most hardware wallets support pass-phrases, while most software wallet applications do not. + +{% include image.html + image = "/assets/images/guide/private-key-management/backups/offline-discoveryprotection.jpg" + retina = "/assets/images/guide/private-key-management/backups/offline-discoveryprotection@2x.jpg" + alt-text = "Offline backup with discovery protection" + width = 800 + height = 420 +%} + + +**Do** +- Use a secure pass-phrase, it is case sensitive and can include numbers and special characters +- Have redundant and secure backups of both the recovery-phrase and the pass-phrase, they are equally important for successful wallet recovery +- Understand you now have two distinct wallets, (one each from the recovery-phrase with or without the pass-phrase), this can be useful to fool a bad actor, or a risk if next-of-kin is unaware of the pass-phrase + +**Don’t** +- Store the recovery-phrase and pass-phrase together +- Forget to document your setup for next-of-kin + +**Suitable for** +- Large amounts +- Situations where the backup can be discovered by bad actors + +**Alternative** + +Set up a hardware wallet from the recovery and pass-phrase that uses a PIN to protect usage. The PIN now becomes the protection against theft on discovery and should be saved somewhere safe just like the pass-phrase. + +
+ +#### Level 4 +## Multiple backups with discovery protection +One remaining flaw with the single offline backup levels is that severe damage to the one location where they are stored, could lead to the backup not being usable. This could be a fire, flood, earthquake or similar, all more or less likely depending on where you live. + +To protect against such a *catastrophic event* we can create multiple backups, and distribute them to other locations. This could be a second home, trusted family and friends or a safe deposit box. + +As the risk of discovery increases with the multiplying backups, it's best to maintain the protection against theft on discovery with a pass-phrase, or hardware wallets with a PIN. + +{% include image.html + image = "/assets/images/guide/private-key-management/backups/multiple-discoveryprotection.jpg" + retina = "/assets/images/guide/private-key-management/backups/multiple-discoveryprotection@2x.jpg" + alt-text = "Multiple offline backups with discovery protection" + width = 800 + height = 420 +%} + +**Do** +- Make sure you have reduntant copies of all parts of the backup in several locations +- Document your setup well for next-of-kin now that complexity has increased + +**Don’t** +- Forget to safely store the pass-phrases or PINs + +**Suitable for** +- Large amounts +- In locations where catastrophic events are common, or likely to cause severe damage + +
+ +--- + +## Inheritance instructions +For any backup setup, sufficient information and understandable instructions for recovering the wallet should be available to next-of-kin. + +Even though it might feel uncomfortable (or unnecessary if you are young and single), it is never too early to document your wallets. If you don’t, there is a very high chance that next-of-kin will not be able to inherit your funds. + +At a minimum, document each wallet with a given name (Bob’s Bitcoin wallet 1), how to recover it, when it was created and what application was used to create the wallet. Ideally this document has all the instructions required to recover the wallet, but not the information itself (*recovery-phrase*, *pass-phrase* etc.), as that might expose you to theft on discovery risks. + +**Do** +- Make next-of-kin aware of the existence of any wallets +- Explain clearly how to recover the setup, and how to access the required information + + +**Don’t** +- Store any required information ONLY in locations that will not be accessible to next-of-kin (password managers, single user accounts etc.) + + +**Suitable for** +- Any amount diff --git a/guide/private-key-management/introduction.md b/guide/private-key-management/introduction.md index 3d4c4ca33..fad880e0d 100644 --- a/guide/private-key-management/introduction.md +++ b/guide/private-key-management/introduction.md @@ -55,4 +55,10 @@ An introduction to some of the common private key management schemes for shared --- +### [Bitcoin backups]({{ '/guide/private-key-management/backups/' | relative_url }}) + +A straightforward guide to safe manual backups. + +--- + Start at the top with [private key schemes]({{ '/guide/private-key-management/schemes/' | relative_url }}). diff --git a/guide/private-key-management/multi-user-schemes.md b/guide/private-key-management/multi-user-schemes.md index 2a23bc765..0bc841e74 100644 --- a/guide/private-key-management/multi-user-schemes.md +++ b/guide/private-key-management/multi-user-schemes.md @@ -87,4 +87,4 @@ Few tailor-made products exist for shared wallets, but any wallet application th --- -OK, let's have a look at some [case studies]({{ '/guide/case-studies/' | relative_url }}). +OK, to end this chapter let's have a look at how to do safe [Bitcoin backups]({{ '/guide/private-key-management/backups/' | relative_url }}). diff --git a/guide/private-key-management/single-user-schemes.md b/guide/private-key-management/single-user-schemes.md index 5aaca93b2..2135bbaf3 100644 --- a/guide/private-key-management/single-user-schemes.md +++ b/guide/private-key-management/single-user-schemes.md @@ -132,9 +132,9 @@ This scheme is suitable for users who are already familiar with bitcoin and proc ### How it works The wallet application will generate a 12 or 24 word phrase (seed / [recovery phrase]({{ '/guide/glossary/#recovery-phrase' | relative_url }})) from which all the wallet’s [keys]({{ '/guide/glossary/#keys' | relative_url }}) can be derived. This means the user can have access to the wallet from any compatible wallet application with the phrase, even if they lose the device or software. -This can be an effective way to reduce the risk of loss from theft if the backup is offline in a safe place, but puts more of the op-sec burden on the individual user. The security and risk will only be as good as how they backup the recovery phrase. You need to take resistance to physical theft, fire and other destructive events into account. To get the best security out of recovery phrases they should be kept on several dedicated [metal storage pieces](https://jlopp.github.io/metal-bitcoin-storage-reviews/) in secure places offline. A fair amount of effort and knowledge is required for this. +This can be an effective way to reduce the risk of loss from theft if the backup is offline in a safe place, but puts more of the burden on the individual user. The security and risk will only be as good as how they backup the recovery phrase. -A full guide to manual backup best practices for users is out of scope for this chapter but the [Do's and Dont's](https://blog.keys.casa/the-dos-and-donts-of-bitcoin-key-management/) of Bitcoin key management is a good starting point. +Safe backups can be made fairly simple, take a look at our [Bitcoin backups](https://blog.keys.casa/the-dos-and-donts-of-bitcoin-key-management/) guide as good starting point. {% include fact/pros.html %}