BIP85 Passwords: A Solution to Password Loss

Lately, we've seen a bunch of important updates in the Bitcoin protocol like BIP32, BIP39, Segwit, taproot, and the one that really got me hyped is BIP85. I'm gonna break it down for you in this post. So, what is BIP-85 anyway? If you wanna dive deeper, check out my thread where I gathered all the references I could find at that time. It’s called How to backup multiple seeds derived from one: BIP-85. The major thing BIP-85 does, especially in wallets that support it, is generating child seed phrases from a main seed phrase. On top of that, it can also generate xprivs, private keys, and whatnot. What’s less talked about is that BIP-85 lets us mathematically create Base64 characters that can serve as a pretty solid password based on the parent seed phrase and the BIP-39 passphrase if you’ve got that set up. Coldcard (MK4 and Q) is one of the few wallets that really dig into what BIP-85 can do, while the iancoleman .html script just sticks to the basic BIP-85 and doesn’t touch on the password aspect. If you wanna jump right into how to use this technique, skip to the 'How-to'. Now, about why I’m interested in this. So, I haven’t started using it myself yet, but my grandma struggles with keeping track of her passwords. She jots them down in a notebook but often misplaces it or takes ages to find what she needs. I went ahead and installed keepassDx on her Android, set up a database, and gave her a temporary master password until I figure something better out. But she's still having a tough time with it.

Interesting idea and a different approach. Now I ask: the risk of losing the seed phrase is the same as losing the "normal" password, right? So, the idea they're proposing is that you keep the seed key, and your grandmother uses the password, is that it?

The ideal is she would keep all the necessary items for recovery when she no longer has access to the final password generated by the BIP-85 PWD. However, since she doesn't have the autonomy to do that, I keep the copies with me, so she has access to the backup items, like BIP-39 passphrase. The parent seed is also with me, so I also have access. The parent seed was already mine, it's also part of a backup I was keeping. It's a smart way to diversify my own backup by keeping a copy with her. I'm even thinking about creating documentation, maybe even recording a video demonstrating how to recover the PWD password. This will be useful if I'm no longer here. But for now, I periodically remind her: "This is your backups to recover your password" which helps reinforce her memory, especially when dealing with an elderly person who has spent a good part of her life outside the digital environment. However, I'm the one who helps manage her finances, as no one else has the time or interest. For now, the experiment is working. I created the password for her in the middle of last year, and a few days ago, I simulated a recovery with her and it worked.

This is a very creative idea and I can see the logic behind using deterministic entropy this way. But don’t you think this might be adding extra complexity to a problem that password managers already solve quite well? I’m also wondering if tying anything related to passwords back to a seed phrase could create a situation where a small mistake exposes more than intended. For someone who isn’t very technical, could this approach end up being more confusing during recovery than simply relying on a good password manager and proper backups? I'm just curious to know how you see this trade-off in practice.

Yeah, it was the way i found for people, especially those more prone to losing important passwords like wallet ones. The user must understand how the BIP-39 and BIP-85 work and be aware of the risks and benefits associated with their use. There's still the risk of the person losing a traditional password and having no way to recover it. The hierarchical recovery of the BIP-85 solves this, but the person should be aware of how it works. To reduce risks, one can derive BIP-85 passwords (PWD) using only the parent seed phrase, without a passphrase (i.e, an "empty" passphrase) and adjust them as needed. Or, if using a passphrase, use dictionary words or something related to a memory or daily life. This way, even if the passphrase is "weak," if it's separate from the seed phrase and written somewhere that doesn't raise suspicion, it's safe because the seed phrase has strong entropy.