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I understand that the Bitcoin QT wallet is already encrypted to some extent when I use a password. Is it best-practice to further encrypt the wallet file for long term storage?

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From Bitcoin Wiki:

Wallet encryption uses AES-256-CBC to encrypt only the private keys that are held in a wallet. The keys are encrypted with a master key which is entirely random. This master key is then encrypted with AES-256-CBC with a key derived from the passphrase using SHA-512 and OpenSSL's EVP_BytesToKey and a dynamic number of rounds determined by the speed of the machine which does the initial encryption (and is updated based on the speed of a computer which does a subsequent passphrase change).

This means that it doesn't encrypt metadata or pubkeys. If you want to achieve a greater degree of security and privacy, I recommend to further encrypt the wallet file.

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  • Great answer, thanks! Questions on rounds: if the dynamic number of rounds is based on the machine's capabilities, how does Bitcoin QT know the number of rounds needed to decrypt when opening the same wallet on a different machine? Are the number of rounds stored in the wallet file? If so, are they unencrypted?
    – f1lt3r
    Aug 11 '20 at 16:47

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