How to Encrypt Your Bitcoin Wallet
Bitcoin Core developers enabled a feature inside the bitcoin client that lets you “encrypt” your wallet by protecting it with a passphrase. By using a passphrase, you “lock” your coins from being spent. Even if an attacker were to gain access to the device on which your bitcoin wallet is running, they would not be able to do anything with the funds unless they also had your passphrase.
Your sensitive bitcoin information — a file called wallet.dat that holds the digital ownership of your BTC — is not encrypted by default. This means that if you just install the bitcoin client on a computer or laptop, it isn’t protected. As soon as someone gains access to your computer, they can spend your coins instantly.
Therefore, you should properly encrypt your bitcoin wallet. The latest Bitcoin Core client contains a feature that encrypts your wallet with a passphrase. Or if you prefer, you can use an external tool to encrypt your wallet.dat file, most of which are completely free of charge to use. Keep in mind that you need to enter the passphrase every time you want to access your funds or look at a transaction. Encrypting a bitcoin wallet restricts it to “spectator” mode, in which you can see the balance and incoming transactions, but nothing else in detail.
All bitcoin users should encrypt their bitcoin client, and the best code of conduct is to use a very strong and difficult-to-crack password — preferably a password that contains numbers, upper- and lowercase letters, and even symbols such as @ or #. This password should seem as random as possible to anyone else, but keep in mind you have to enter it manually every time you want to use your bitcoin wallet to its full potential.
If you want to encrypt a mobile bitcoin wallet, the process is slightly different. Most mobile applications store the wallet.dat file — or its mobile counterpart — on the device itself and protect it with a PIN code. Though PIN codes are generally less secure than encryptions keys, they provide enough security for most users. However, you can always look into encrypting mobile wallets as well. Find software solutions using keywords typed into your favorite search engine, such as 7Zip, Axcrypt, TrueCrypt, or Irzip.