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Usually in many wallet, ronin, xdefi, electrum, and metamask, we are given seed phrase and we got to set password

I set my password to be really simple.

The reason is because I think the seed phrase is what's really important.

Anyone that knows the seed phrase can just recreate the whole wallet set a new password and get my money.

So why do we even have to set password in most wallets?

Is it even important?

The only think I can think of is if I left my computer unattended and the screen saver doesn't work locking the screen. I can't think of any other reason why.

2 Answers 2

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The password encrypts the wallet file itself, protecting all your secret keys in any situation that an attacker gains access to your files. This includes physical access, but also viruses/malware, recovery off an old hard drive you sold without properly wiping, and so on. It is also important if you store backups of the wallet file elsewhere (for example, an external backup drive - or even worse, the cloud), which could be potentially stolen and accessed.

Thus, compromise of your wallet file is certainly as severe as compromise of the seed words (and more likely, if you've stored your seed phrase securely on paper). So it's important to have a good password on it. A weak password on the wallet file would be similar to leaving your seed words in a text file on your desktop.

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  • A weak password on the wallet file is like seed words on a text file? No a text file need can be read by hidden scripts. Anything encrypted even with simple password cannot.
    – obfuscated
    Jan 25, 2022 at 9:28
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    A simple script could easily send the wallet file to the attacker who could crack the simple password very easily. Essentially, a weak password gives almost no protection. Jan 25, 2022 at 9:30
  • Why enscrypt wallet file using password? Why not using the seed phrase then?
    – obfuscated
    Feb 11, 2022 at 8:22
  • Because a password is more convenient and easier to remember for a human than a seed phrase is Feb 11, 2022 at 8:35
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As Meshcollider points out, the password file encrypts the local copy of the wallet (file), which includes the seed phrase.

In other words, an attacker needs either:

  • The seed phrase
  • The wallet file AND its password

So the password can be justified to be weaker than the seed phrase - because the attacker also needs access to the wallet file. The extent to which its security matters thus depends on how well you can secure access to the wallet or wallet file. Without specifics of one's setup, I would recommend a strong password regardless.

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