> Even if the FBI is not able to transfer the money, merely having possession of the wallet file itself is enough to prevent the coins being spent.
Yes ... if no backups exist.
Yes ... if no backups exist.
Also, surely a backup exists. What is an effective way to backup the wallet so that it can survive decades of prison time? Particularly if a trustworthy friend does not exist?
A piece of paper: http://bitcoinpaperwallet.com/
You should only print it from a secure system though.
They would need to break the encryption first though.
- Deliberate invalidation: "sweeping" is the process of transferring all funds from a wallet into another one. If the owner ever gets access to some private computer time and one of his wallet backups, he can empty everything into a new address - one where the private key is stored in an undisclosed location, even his brain. Anyone with access to the wallet file in question in this article would do well to sweep it into a new address now.
- The reference client creates 100 addresses at a time and stores their keys in a file. New addresses are used by default for "change." Change is another subject entirely, but the end result is that yes, you do need to keep updating your backups every 100 transactions or so. This has the nice effect of helping anonymity and passively invalidating that file you forgot about, and the not-so-nice effect of being annoying. Some other clients have different behavior.