How to Fix Corrupted Bitcoin Wallets and Rejected Passwords

Since its release in 2009, Bitcoin has evolved from a niche experiment into a global phenomenon. Many early adopters who mined or bought Bitcoins when they were worth virtually nothing eventually moved on, leaving their digital wealth sitting on old hardware that has been wiped or that is now damaged.

If this sounds familiar, you may have already spent hours scouring old storage devices with data recovery software like Disk Drill, DMDE, or R-Studio. Perhaps those efforts actually paid off when you located a wallet.dat file from Bitcoin Core, a .key file from Multibit Classic, a .wallet.aes.json file from Blockchain.com, or any other “holy grail” file that contains your Bitcoins.

However, the initial rush of discovery often turns to dismay when you realize the file is unreadable. You attempt to open the wallet with the appropriate software, only to be met with cryptic error messages indicating that the data is corrupted or that your password is incorrect:

Provided AES key is wrong
Cannot load wallet (1): AssertionError()
wallet.dat corrupt, salvage failed
Could not decrypt bytes
Wallet file verification failed

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Is it a forgotten password or a corrupted file?

In the case of password-protected wallets, it is entirely possible that your wallet file is intact and that you have simply forgotten a password set 10 or 15 years ago. Thus, if your wallet software isn’t specifically complaining about data corruption, it is worth considering if your password is indeed valid. It may feel like gaslighting, but we humans are terrible when it comes to remembering passwords.

That being said, when a wallet file is corrupted, the software cannot always distinguish between damaged data and an incorrect password. This is the unfortunate reality of using data recovery tools on wiped or failing drives: sometimes, they can only partially reconstruct your wallet file. In these scenarios, your software will fail to decrypt the file even if you provide the correct password.

Assessing the odds of success

If you are dealing with a corrupted wallet file — whether it is password-protected or not — you may be wondering if recovery is possible. The answer is yes, but your odds of success will depend on the extent of the corruption and where it is located within the wallet file.

In this article, I will walk you through a practical example of how to recover a corrupted wallet file. While I aim for clarity, this guide is technical by nature and assumes a baseline level of computer knowledge. Additionally, while the focus is on Bitcoin, this article is equally applicable to other cryptocurrencies like Ethereum, Litecoin, Dash, Dogecoin, Tron, Cardano, and more.

How are Bitcoins stored?

Technically speaking, Bitcoins are not stored “on” your hard drive in the way a photo or a document is. Instead, what your computer actually holds is a secret, or a piece of data that authorizes you to move the associated funds by proving you are their rightful owner.

This secret typically takes the form of a private key (such as 5Kb8kLf9zgWQnogidDA76MzPL6TsZZY36hWXMssSzNydYXYB9KF) or a seed phrase (such as circle estate expand always order umbrella tackle bonus vehicle broom quiz voice), and it is stored within a file on your hard drive. Throughout this guide, I will refer to any file containing these secrets as a wallet file.

While wallet files differ significantly in their internal structure, they generally fall into two categories: human-readable files accessible via text editors, and machine-readable files requiring specialized software to parse.

Fixing a corrupted wallet file: a case study

To understand how we can bypass software errors to recover funds, let’s examine a real-world scenario involving a Multibit Classic .key file that is protected by a password. This format is ideal for a walkthrough because its internal structure is straightforward, making it easier to diagnose than more complex, machine-readable wallet types.

Never work on your original wallet file. Always create a duplicate and perform all recovery attempts on the copy to prevent accidental data loss.

In this scenario, attempting to import the .key file in Multibit Classic results in the following error message, despite the user knowing for certain that the password (test) is correct: The private keys unlock failed. The error was "Could not decrypt input string".

Step 1: Analyzing the raw data

When we open the .key file in a text editor, we see the following:

1U2FsdGVkX18SvZ59mD7chMSmwq5+7HQAAxuAci.QxEWZMS577tV1NLTRZQF/iEl7kPHfIdNPhvov
23ofBEXiyPQLdWnplg7hkZwUDpw6y2P6Ev9rwzpoDjlcv+fNGNkXn

Technical knowledge is critical here, as the internal structure of a wallet file varies significantly depending on the software that created it. For instance, a password-protected Multibit Classic .key file is expected to start with U2FsdGVkX1 and to contain only characters belonging to the Base64 alphabet:

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z a b c d e f g h i j k l m n o p q r s t u v w x y z 0 1 2 3 4 5 6 7 8 9 + / =

Step 2: Spotting the data corruption

Now, look closely at our corrupted file again. Can you spot the problem?

Near the middle of the first line, there is a dot (.) character, which is not part of the Base64 alphabet. This is a clear indicator of data corruption. While there could be other hidden errors, this invalid character is an obvious place to start our investigation.

Step 3: Repairing the data corruption

We can try to fix the data corruption through character permutation. In other words, we will create variations of the .key file where the . character is replaced by every possible character in the Base64 alphabet. Since there are 64 characters in the alphabet (plus the = padding character), we are going to generate 65 different versions of the .key file.

In the first file, the . character is replaced by A.
In the second file, the . character is replaced by B.
In the third file, the . character is replaced by C.
… and so on.

We’re testing the entire Base64 alphabet here for simplicity, but in a targeted recovery, we would narrow the scope. In this case, we would ignore the = padding character, since it can only appear at the end of a string.

Step 4: Testing the results

At this stage, we have two options. We can attempt to import each of the 65 files manually into Multibit Classic. Because the number of files is so small, this is actually a viable – though tedious – option for someone without programming skills. However, if a file has multiple corrupted characters, the number of permutations can quickly reach into the millions or billions. In those cases, you would need to write a script or use specialized software to automate the decryption attempts.

Regardless of the method chosen, the goal is to systematically test valid Base64 characters until the software successfully recognizes the wallet file. In this example, the repair is successful when the . character is replaced by a forward slash (/):

1U2FsdGVkX18SvZ59mD7chMSmwq5+7HQAAxuAci/QxEWZMS577tV1NLTRZQF/iEl7kPHfIdNPhvov
23ofBEXiyPQLdWnplg7hkZwUDpw6y2P6Ev9rwzpoDjlcv+fNGNkXn

When this corrected file is imported, Multibit Classic finally accepts the password test and returns the message: Importing private keys... completed successfully. The funds are now accessible.

My professional recovery service

The example above illustrates a successful recovery involving a single corrupted character. While this shows that hope can be warranted, remember that I chose the .key format from Multibit Classic because its simple structure allows for a clear walkthrough. In reality, data corruption is often significantly more complex.

For instance, if we attempt to open a wallet.dat file from Bitcoin Core in a text editor, we will see nothing but a wall of garbled, unintelligible characters. These are machine-readable files; to diagnose them, we must use a hex editor to analyze its raw binary structure, which looks like this:

While a single error in a .key file is relatively easy to isolate, the internal structure of a wallet.dat file is another ballgame. Because it is a machine-readable format composed of nested information, manual repairs are virtually impossible without specialized forensic expertise.

This is why I offer a professional recovery service designed to handle corrupted or unreadable cryptocurrency wallets. I work on principles of data surgery as shown in this article. To make this accessible and risk-free for you, I operate on a success-only basis:

15% recovery fee: I charge a fee of 15% of the recovered cryptocurrencies.
No upfront costs: I do not charge any hourly rates, flat fees, or upfront costs.
No success, no fee: If I am unable to recover your funds, you don’t pay anything.

If you have located a wallet file but find yourself locked out by data corruption, click the button below to get in touch with me. Let’s see if your digital wealth can be saved!