Clear DefinitionsPassword Manager (for Wallet Passwords)
2 min read
Pronunciation
[pas-wurd man-i-jer (for wol-it pas-wurdz)]
Analogy
Think of a password manager as a highly secure digital vault specifically for your passwords. Instead of trying to remember dozens of complex and unique passwords for every online account or software wallet, you only need to remember one very strong master password to open this vault. The manager then fills in the specific passwords for you when needed, keeping them safe from prying eyes.
Definition
A software application designed to securely store and manage passwords, including those used to encrypt software wallets or to access cryptocurrency exchange accounts. It helps users create strong, unique passwords for different services and stores them in an encrypted database, accessible via a master password.
Key Points Intro
Password managers help secure access to wallet software and exchange accounts by managing strong, unique passwords, but should not be used for storing seed phrases.
Key Points
Centralized Secure Storage: Stores various passwords in an encrypted vault.
Strong Password Generation: Often includes tools to generate complex, unique passwords.
Master Password Access: Requires a single, strong master password to unlock the vault.
Auto-Fill Convenience: Can automatically fill login credentials on websites and applications.
Example
Alex uses a password manager to store the complex password for his desktop software wallet file. He also uses it to manage unique, strong passwords for several cryptocurrency exchange accounts. He only needs to remember his master password for the password manager itself. This prevents him from reusing passwords or using weak ones.
Technical Deep Dive
Password managers typically use strong encryption algorithms like AES-256 to encrypt the database where passwords are stored. The master password is used to derive the encryption key. Good password managers operate on a zero-knowledge principle, meaning the provider cannot access the user's stored passwords. Features often include browser extensions for auto-filling, secure note storage, and sometimes 2FA for accessing the manager itself. It's crucial to choose a reputable password manager and create an extremely strong, unique master password.
Security Warning
Never store your primary seed phrase or private keys directly in a password manager. While excellent for passwords that encrypt local wallet files or website logins, the seed phrase is the master key and requires offline or more specialized storage. The security of all stored passwords relies on the strength of the master password and the security of the device running the password manager.
Caveat
If your master password for the password manager is compromised, all your stored passwords could be at risk. Similarly, if the device where the password manager is installed gets infected with malware, it could potentially capture the master password or access the vault when unlocked. Using 2FA on the password manager itself is highly recommended.
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