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Home » Bitcoin » What Is BIP 38 Encryption & How To Use It?
BySudhir Khatwani Updates OnMay 13, 2019 Bitcoin
If you have been into Bitcoin space for some time, then I guess you must have heard about BIP 38 (Bitcoin Improvement Protocol 38).
But just in case, if you haven’t heard about it, I urge you to educate yourself on this topic by reading this blog post.
Of course, it is none of my business to urge anyone, but it is my responsibility to tell you guys about Bitcoin concepts that will help you use it safely and securely.
That’s why today, I am talking about BIP encryption, that too specifically for Bitcoin paper wallets and Bitcoin private keys because I think it will enhance the security of your bitcoins.
So without further addon let’s get into it:
BIP 38 (aka Bitcoin Improvement Protocol #38) is an encryption technique to encrypt the private keys of Bitcoin on a Bitcoin paper wallet or physical Bitcoin.
You can think of it as password protection for a password (i.e., your private keys).
But in the Bitcoin realm, it is called passphrase-protected private key, which means to encrypt your private keys using a password/passphrase.
As I have stated in Bitcoin paper wallet article, Bitcoin paper wallet is merely a piece of paper with private & public keys printed on it.
That’s why this type of wallet can be easily compromised if stolen or otherwise exposed because it is straightforward to get your private keys from this wallet.
A similar, thing can happen with physical bitcoins too which has private keys printed on it.
That’s why we need an extra layer of security to safeguard paper wallets or physical coins, and BIP 38 provides precisely that by providing second-factor authentication for paper wallets.
Simply put, BIP 38 is a way to protect private keys using encryption.
So, if you are using a Bitcoin private key which is already encrypted using BIP 38 passphrase, then you will be required to decrypt the private key before being able to use it.
For example, if you are scanning an encrypted private key on a Mycelium like Bitcoin wallet, then the wallet will automatically ask you for the passphrase to decrypt your private keys.
Without providing this passphrase, one will not be able to spend funds associated with that encrypted private key. Of course, unless your passphrase is very simple or easy to BIP 38 brute force.
Note: BIP 38 was initially proposed for Bitcoin, but slowly it has been adopted by other cryptocurrencies too and why not also, when it enhances the security of funds.
Encrypting private keys using BIP 38 is very easy.
You need to find a Bitcoin paper wallet generator that supports BIP 38 encryption.
Once you have procured it, you can directly convert your regular paper wallet keys into BIP 38 encrypted keys.
Here is the step by step procedure to do it using bitaddress.org :
Step #1. Take the normal unencrypted private keys of your paper wallet and enter in the below-shown textbox under ‘Wallet Details’ section. For this example, we are using this unencrypted key: L4qCgYtGybqv8PmrURrj7dAPzbo1S4ndHmRpQ2zbjU18yf6K6yEp. The WIF for this key is 5KYK4541SxvgE1BAPyqRVgusyYu7SckR5hswEq2irVmtencrSya
Step #3. Enter BIP 38 passphrase and click on ‘Encrypt BIP 38’ option shown in the above image.
This is how your encrypted BIP38 keys will look like:
Note: BIP38 encrypted keys starts with ‘6P.’
Decrypting BIP38 keys is even easier.
For this, you need to use a simple BIP38 tool to decrypt bitcoin private keys and here is the step by step procedure to that:
Step #1. Go to bitcoinpaperwallet.com and click on ‘Validate or Decrypt’ section
Step #2. Enter the encrypted private key that you want to decrypt.
Step #3. Now, click on the ‘Validate/Decrypt’ option under the private key textbox and enter the decrypting passphrase ‘TheMoneyMongers’ and click on the ‘Decrypt BIP38’ button.
Step #4. Decrypting will start, and it may take a few seconds for it.
After the decryption is over, you will be able to see this decrypted private key in WIF formate: 5KYK4541SxvgE1BAPyqRVgusyYu7SckR5hswEq2irVmtencrSya which is similar to its un-encrypted version shown in step #1 of the previous section.
So that’s how you can create encrypted BIP 38 private keys.
But the passphrase that you would use to encrypt your keys should be hard to guess.
On the other hand, if you don’t remember this passphrase then it will be impossible to decrypt your private keys and recover your funds just like this gentlemen:
Lastly, BIP 38 encryption of paper wallets allow you to keep your paper wallets more safely, and you need not worry even if they are stolen/lost/exposed because unless the attacker knows the passphrase he/she will not be able to spend your funds.
This way it also becomes quite easy to pass on paper wallets from one party to another without worry about exposing your private keys and later the passphrase can be conveyed to the intended recipient over phone or email.
If you liked this article? Do share it with your friends & family to tell them about BIP38 encryption and its consequences !!
Hey there! I am Sudhir Khatwani, an IT bank professional turned into a cryptocurrency and blockchain proponent from Pune, India. Cryptocurrencies and blockchain will change human life in inconceivable ways and I am here to empower people to understand this new ecosystem so that they can use it for their benefit. You will find me reading about cryptonomics and eating if I am not doing anything else.
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