Need Help with Hidden/Decoy Wallets \ stacker news ~bitcoin

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456 sats \ 6 comments \ @CoSatoshi 26 Oct 2023 bitcoin

Hey SN, I need some help with hidden/decoy wallets. I recently watched this video from Matthew Kratter's Bitcoin University, in which he sets up a 'hidden' wallet using Trezor Suite.

I'm trying to figure out how to do this with a different platform, specifically Sparrow. I can't find anything about this anywhere. Would love some help or at least guidance in the right direction. I know it has something to do with the passphrase, but it fails every time I try it in Sparrow.

--Cheers in advance

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415 sats \ 1 reply \ @ek 26 Oct 2023

When you create a new software wallet, you get this screen:

https://i.postimg.cc/jqHB0nn6/2023-10-26-040739-649x692-scrot.png

You can choose to add a passphrase.

Using a passphrase should be the same as hidden wallets since any password will open a valid wallet:

https://i.postimg.cc/FFVCntwD/2023-10-26-040812-699x151-scrot.png

This is something different from using a password to encrypt your wallet which you can also do with Sparrow.

0 sats \ 0 replies \ @CoSatoshi OP 26 Oct 2023

Thank you so much, that's very helpful.

326 sats \ 1 reply \ @MattInTech 26 Oct 2023

The passphrase is just a 25th word added to your seed, as the BIP-39 standard dictates. So, the idea is that even if your seed gets compromised, the wallet generated by only the 24 words is a different one than the wallet made by 24 words + passphrase.

To setup a decoy wallet, simply import just the 24 words and deposit a relatively low amount of BTC in there. Whoever stole your seed will think "I got it" and will stop looking, leaving the majority of your funds safe in the wallet unlocked by the passphrase. If something like that happens, it is still good practice to wipe the "real" wallet and move your funds to a new one.

Hope this helps!

21 sats \ 0 replies \ @CoSatoshi OP 26 Oct 2023

Thank you so much, that's very helpful.

11 sats \ 1 reply \ @aoeu 26 Oct 2023

I'd then keep a little honeypot of sats on the decoy wallet so that if you ever see those sats move then you know that your seed phrase was compromised. In that case it should hopefully give you enough time to move the sats protected by a passphrase (not stored with the seed phrase) to an address secured by a different signing device.

121 sats \ 0 replies \ @CoSatoshi OP 26 Oct 2023

Good call! I love this concept and I can't believe I didn't know about it for so long.