bug fixes and encrypt-on-disk preference

lbry/lbry/extras/daemon/Daemon.py

@@ -1197,8 +1197,7 @@ class Daemon(metaclass=JSONRPCServerType):
         Returns:
             (bool) true if wallet is unlocked, otherwise false
         """
-        wallet = self.wallet_manager.get_wallet_or_default(wallet_id)
-        return wallet.unlock(password)
+        return self.wallet_manager.get_wallet_or_default(wallet_id).unlock(password)
 
     @requires(WALLET_COMPONENT)
     def jsonrpc_wallet_lock(self, wallet_id=None):
@@ -1214,8 +1213,7 @@ class Daemon(metaclass=JSONRPCServerType):
         Returns:
             (bool) true if wallet is locked, otherwise false
         """
-        wallet = self.wallet_manager.get_wallet_or_default(wallet_id)
-        return wallet.lock()
+        return self.wallet_manager.get_wallet_or_default(wallet_id).lock()
 
     @requires(WALLET_COMPONENT, conditions=[WALLET_IS_UNLOCKED])
     def jsonrpc_wallet_decrypt(self, wallet_id=None):
@@ -1231,8 +1229,7 @@ class Daemon(metaclass=JSONRPCServerType):
         Returns:
             (bool) true if wallet is decrypted, otherwise false
         """
-        wallet = self.wallet_manager.get_wallet_or_default(wallet_id)
-        return wallet.decrypt()
+        return self.wallet_manager.get_wallet_or_default(wallet_id).decrypt()
 
     @requires(WALLET_COMPONENT, conditions=[WALLET_IS_UNLOCKED])
     def jsonrpc_wallet_encrypt(self, new_password, wallet_id=None):
@@ -1250,8 +1247,7 @@ class Daemon(metaclass=JSONRPCServerType):
         Returns:
             (bool) true if wallet is decrypted, otherwise false
         """
-        wallet = self.wallet_manager.get_wallet_or_default(wallet_id)
-        return wallet.encrypt(new_password)
+        return self.wallet_manager.get_wallet_or_default(wallet_id).encrypt(new_password)
 
     @requires(WALLET_COMPONENT, conditions=[WALLET_IS_UNLOCKED])
     async def jsonrpc_wallet_send(
@@ -1604,7 +1600,7 @@ class Daemon(metaclass=JSONRPCServerType):
     Wallet synchronization.
     """
 
-    @requires("wallet")
+    @requires("wallet", conditions=[WALLET_IS_UNLOCKED])
     def jsonrpc_sync_hash(self, wallet_id=None):
         """
         Deterministic hash of the wallet.
@@ -1621,21 +1617,18 @@ class Daemon(metaclass=JSONRPCServerType):
         wallet = self.wallet_manager.get_wallet_or_default(wallet_id)
         return hexlify(wallet.hash).decode()
 
-    @requires("wallet")
+    @requires("wallet", conditions=[WALLET_IS_UNLOCKED])
     async def jsonrpc_sync_apply(self, password, data=None, encrypt_password=None, wallet_id=None, blocking=False):
         """
         Apply incoming synchronization data, if provided, and then produce a sync hash and
         an encrypted wallet.
 
         Usage:
-            sync_apply <password> [--data=<data>] [--encrypt-password=<encrypt_password>]
-                       [--wallet_id=<wallet_id>] [--blocking]
+            sync_apply <password> [--data=<data>] [--wallet_id=<wallet_id>] [--blocking]
 
         Options:
             --password=<password>         : (str) password to decrypt incoming and encrypt outgoing data
             --data=<data>                 : (str) incoming sync data, if any
-            --encrypt-password=<encrypt_password> : (str) password to encrypt outgoing data if different
-                                                    from the decrypt password, used during password changes
             --wallet_id=<wallet_id>       : (str) wallet being sync'ed
             --blocking                    : (bool) wait until any new accounts have sync'ed
 
@@ -1644,7 +1637,6 @@ class Daemon(metaclass=JSONRPCServerType):
 
         """
         wallet = self.wallet_manager.get_wallet_or_default(wallet_id)
-        assert not wallet.is_locked, "Cannot sync apply on a locked wallet."
         if data is not None:
             added_accounts = wallet.merge(self.wallet_manager, password, data)
             if added_accounts and self.ledger.network.is_connected:
@@ -1656,8 +1648,7 @@ class Daemon(metaclass=JSONRPCServerType):
                     for new_account in added_accounts:
                         asyncio.create_task(self.ledger.subscribe_account(new_account))
             wallet.save()
-            wallet.unlock(password)
-        encrypted = wallet.pack(encrypt_password or password)
+        encrypted = wallet.pack(password)
         return {
             'hash': self.jsonrpc_sync_hash(wallet_id),
             'data': encrypted.decode()

lbry/lbry/wallet/account.py

@@ -30,7 +30,7 @@ class Account(BaseAccount):
 
     @property
     def hash(self) -> bytes:
-        h = sha256(json.dumps(self.to_dict(False)).encode())
+        h = sha256(json.dumps(self.to_dict(include_channel_keys=False)).encode())
         for cert in sorted(self.channel_keys.keys()):
             h.update(cert.encode())
         return h.digest()
@@ -119,8 +119,8 @@ class Account(BaseAccount):
         account.channel_keys = d.get('certificates', {})
         return account
 
-    def to_dict(self, include_channel_keys=True):
-        d = super().to_dict()
+    def to_dict(self, encrypt_password: str = None, include_channel_keys: bool = True):
+        d = super().to_dict(encrypt_password)
         if include_channel_keys:
             d['certificates'] = self.channel_keys
         return d

lbry/tests/integration/test_wallet_commands.py

@@ -1,20 +1,33 @@
 import asyncio
+import json
+from lbry import error
 from lbry.testcase import CommandTestCase
-from binascii import unhexlify
+from torba.client.wallet import ENCRYPT_ON_DISK
 
 
-class WalletSynchronization(CommandTestCase):
-    SEED = "carbon smart garage balance margin twelve chest sword toast envelope bottom stomach absent"
+class WalletEncryptionAndSynchronization(CommandTestCase):
 
-    async def test_sync(self):
-        daemon = self.daemon
-        daemon2 = await self.add_daemon(
+    SEED = (
+        "carbon smart garage balance margin twelve chest "
+        "sword toast envelope bottom stomach absent"
+    )
+
+    async def asyncSetUp(self):
+        await super().asyncSetUp()
+        self.daemon2 = await self.add_daemon(
             seed="chest sword toast envelope bottom stomach absent "
                  "carbon smart garage balance margin twelve"
         )
-        address = (await daemon2.wallet_manager.default_account.receiving.get_addresses(limit=1, only_usable=True))[0]
+        address = (await self.daemon2.wallet_manager.default_account.receiving.get_addresses(limit=1, only_usable=True))[0]
         sendtxid = await self.blockchain.send_to_address(address, 1)
-        await self.confirm_tx(sendtxid, daemon2.ledger)
+        await self.confirm_tx(sendtxid, self.daemon2.ledger)
+
+    def assertWalletEncrypted(self, wallet_path, encrypted):
+        wallet = json.load(open(wallet_path))
+        self.assertEqual(wallet['accounts'][0]['private_key'][1:4] != 'prv', encrypted)
+
+    async def test_sync(self):
+        daemon, daemon2 = self.daemon, self.daemon2
 
         # Preferences
         self.assertFalse(daemon.jsonrpc_preference_get())
@@ -30,16 +43,12 @@ class WalletSynchronization(CommandTestCase):
         self.assertDictEqual(daemon.jsonrpc_preference_get(), {
             "one": "1", "conflict": "1", "fruit": ["peach", "apricot"]
         })
-        self.assertDictEqual(daemon2.jsonrpc_preference_get(), {"two": "2", "conflict": "2"})
+        self.assertDictEqual(daemon2.jsonrpc_preference_get(), {
+            "two": "2", "conflict": "2"
+        })
 
         self.assertEqual(len((await daemon.jsonrpc_account_list())['lbc_regtest']), 1)
 
-        daemon2.jsonrpc_wallet_encrypt('password')
-        daemon2.jsonrpc_wallet_lock()
-        with self.assertRaises(AssertionError):
-            await daemon2.jsonrpc_sync_apply('password')
-
-        daemon2.jsonrpc_wallet_unlock('password')
         data = await daemon2.jsonrpc_sync_apply('password')
         await daemon.jsonrpc_sync_apply('password', data=data['data'], blocking=True)
 
@@ -52,9 +61,7 @@ class WalletSynchronization(CommandTestCase):
 
         # Channel Certificate
         channel = await daemon2.jsonrpc_channel_create('@foo', '0.1')
-        await daemon2.ledger.wait(channel)
-        await self.generate(1)
-        await daemon2.ledger.wait(channel)
+        await self.confirm_tx(channel.id, self.daemon2.ledger)
 
         # both daemons will have the channel but only one has the cert so far
         self.assertEqual(len(await daemon.jsonrpc_channel_list()), 1)
@@ -70,3 +77,102 @@ class WalletSynchronization(CommandTestCase):
             daemon2.wallet_manager.default_account.channel_keys,
             daemon.wallet_manager.default_wallet.accounts[1].channel_keys
         )
+
+    async def test_encryption_and_locking(self):
+        daemon = self.daemon
+        wallet = daemon.wallet_manager.default_wallet
+
+        self.assertEqual(
+            daemon.jsonrpc_wallet_status(),
+            {'is_locked': False, 'is_encrypted': False}
+        )
+        self.assertIsNone(daemon.jsonrpc_preference_get(ENCRYPT_ON_DISK))
+        self.assertWalletEncrypted(wallet.storage.path, False)
+
+        # can't lock an unencrypted account
+        with self.assertRaisesRegex(AssertionError, "Cannot lock an unencrypted wallet, encrypt first."):
+            daemon.jsonrpc_wallet_lock()
+        # safe to call unlock and decrypt, they are no-ops at this point
+        daemon.jsonrpc_wallet_unlock('password')  # already unlocked
+        daemon.jsonrpc_wallet_decrypt()  # already not encrypted
+
+        daemon.jsonrpc_wallet_encrypt('password')
+
+        self.assertEqual(
+            daemon.jsonrpc_wallet_status(),
+            {'is_locked': False, 'is_encrypted': True}
+        )
+        self.assertEqual(
+            daemon.jsonrpc_preference_get(ENCRYPT_ON_DISK),
+            {'encrypt-on-disk': True}
+        )
+        self.assertWalletEncrypted(wallet.storage.path, True)
+
+        daemon.jsonrpc_wallet_lock()
+
+        self.assertEqual(
+            daemon.jsonrpc_wallet_status(),
+            {'is_locked': True, 'is_encrypted': True}
+        )
+
+        with self.assertRaises(error.ComponentStartConditionNotMet):
+            await daemon.jsonrpc_channel_create('@foo', '1.0')
+
+        daemon.jsonrpc_wallet_unlock('password')
+        await daemon.jsonrpc_channel_create('@foo', '1.0')
+
+        daemon.jsonrpc_wallet_decrypt()
+        self.assertEqual(
+            daemon.jsonrpc_wallet_status(),
+            {'is_locked': False, 'is_encrypted': False}
+        )
+        self.assertEqual(
+            daemon.jsonrpc_preference_get(ENCRYPT_ON_DISK),
+            {'encrypt-on-disk': False}
+        )
+        self.assertWalletEncrypted(wallet.storage.path, False)
+
+    async def test_sync_with_encryption_and_password_change(self):
+        daemon, daemon2 = self.daemon, self.daemon2
+        wallet, wallet2 = daemon.wallet_manager.default_wallet, daemon2.wallet_manager.default_wallet
+
+        daemon.jsonrpc_wallet_encrypt('password')
+
+        self.assertEqual(daemon.jsonrpc_wallet_status(), {'is_locked': False, 'is_encrypted': True})
+        self.assertEqual(daemon2.jsonrpc_wallet_status(), {'is_locked': False, 'is_encrypted': False})
+        self.assertEqual(daemon.jsonrpc_preference_get(ENCRYPT_ON_DISK), {'encrypt-on-disk': True})
+        self.assertIsNone(daemon2.jsonrpc_preference_get(ENCRYPT_ON_DISK))
+        self.assertWalletEncrypted(wallet.storage.path, True)
+        self.assertWalletEncrypted(wallet2.storage.path, False)
+
+        data = await daemon2.jsonrpc_sync_apply('password2')
+        with self.assertRaises(ValueError):  # wrong password
+            await daemon.jsonrpc_sync_apply('password', data=data['data'], blocking=True)
+        await daemon.jsonrpc_sync_apply('password2', data=data['data'], blocking=True)
+
+        # encryption did not change from before sync_apply
+        self.assertEqual(daemon.jsonrpc_wallet_status(), {'is_locked': False, 'is_encrypted': True})
+        self.assertEqual(daemon.jsonrpc_preference_get(ENCRYPT_ON_DISK), {'encrypt-on-disk': True})
+        self.assertWalletEncrypted(wallet.storage.path, True)
+
+        # old password is still used
+        daemon.jsonrpc_wallet_lock()
+        self.assertFalse(daemon.jsonrpc_wallet_unlock('password2'))
+        self.assertTrue(daemon.jsonrpc_wallet_unlock('password'))
+
+        # encrypt using new password
+        daemon.jsonrpc_wallet_encrypt('password2')
+        daemon.jsonrpc_wallet_lock()
+        self.assertFalse(daemon.jsonrpc_wallet_unlock('password'))
+        self.assertTrue(daemon.jsonrpc_wallet_unlock('password2'))
+
+        data = await daemon.jsonrpc_sync_apply('password2')
+        await daemon2.jsonrpc_sync_apply('password2', data=data['data'], blocking=True)
+
+        # wallet2 is now encrypted using new password
+        self.assertEqual(daemon2.jsonrpc_wallet_status(), {'is_locked': False, 'is_encrypted': True})
+        self.assertEqual(daemon2.jsonrpc_preference_get(ENCRYPT_ON_DISK), {'encrypt-on-disk': True})
+        self.assertWalletEncrypted(wallet.storage.path, True)
+
+        daemon2.jsonrpc_wallet_lock()
+        self.assertTrue(daemon2.jsonrpc_wallet_unlock('password2'))

torba/tests/client_tests/unit/test_account.py

@@ -435,14 +435,14 @@ class AccountEncryptionTests(AsyncioTestCase):
 
     def test_encrypt_wallet(self):
         account = self.ledger.account_class.from_dict(self.ledger, Wallet(), self.unencrypted_account)
-        account.private_key_encryption_init_vector = self.init_vector
-        account.seed_encryption_init_vector = self.init_vector
+        account.init_vectors = {
+            'seed': self.init_vector,
+            'private_key': self.init_vector
+        }
 
-        self.assertFalse(account.serialize_encrypted)
         self.assertFalse(account.encrypted)
         self.assertIsNotNone(account.private_key)
         account.encrypt(self.password)
-        self.assertFalse(account.serialize_encrypted)
         self.assertTrue(account.encrypted)
         self.assertEqual(account.seed, self.encrypted_account['seed'])
         self.assertEqual(account.private_key_string, self.encrypted_account['private_key'])
@@ -451,42 +451,32 @@ class AccountEncryptionTests(AsyncioTestCase):
         self.assertEqual(account.to_dict()['seed'], self.encrypted_account['seed'])
         self.assertEqual(account.to_dict()['private_key'], self.encrypted_account['private_key'])
 
-        account.serialize_encrypted = True
         account.decrypt(self.password)
-        self.assertEqual(account.private_key_encryption_init_vector, self.init_vector)
-        self.assertEqual(account.seed_encryption_init_vector, self.init_vector)
+        self.assertEqual(account.init_vectors['private_key'], self.init_vector)
+        self.assertEqual(account.init_vectors['seed'], self.init_vector)
 
         self.assertEqual(account.seed, self.unencrypted_account['seed'])
         self.assertEqual(account.private_key.extended_key_string(), self.unencrypted_account['private_key'])
 
-        self.assertEqual(account.to_dict()['seed'], self.encrypted_account['seed'])
-        self.assertEqual(account.to_dict()['private_key'], self.encrypted_account['private_key'])
+        self.assertEqual(account.to_dict(encrypt_password=self.password)['seed'], self.encrypted_account['seed'])
+        self.assertEqual(account.to_dict(encrypt_password=self.password)['private_key'], self.encrypted_account['private_key'])
 
         self.assertFalse(account.encrypted)
-        self.assertTrue(account.serialize_encrypted)
-
-        account.serialize_encrypted = False
-        self.assertEqual(account.to_dict()['seed'], self.unencrypted_account['seed'])
-        self.assertEqual(account.to_dict()['private_key'], self.unencrypted_account['private_key'])
 
     def test_decrypt_wallet(self):
         account = self.ledger.account_class.from_dict(self.ledger, Wallet(), self.encrypted_account)
 
         self.assertTrue(account.encrypted)
-        self.assertTrue(account.serialize_encrypted)
         account.decrypt(self.password)
-        self.assertEqual(account.private_key_encryption_init_vector, self.init_vector)
-        self.assertEqual(account.seed_encryption_init_vector, self.init_vector)
+        self.assertEqual(account.init_vectors['private_key'], self.init_vector)
+        self.assertEqual(account.init_vectors['seed'], self.init_vector)
 
         self.assertFalse(account.encrypted)
-        self.assertTrue(account.serialize_encrypted)
 
         self.assertEqual(account.seed, self.unencrypted_account['seed'])
         self.assertEqual(account.private_key.extended_key_string(), self.unencrypted_account['private_key'])
 
-        self.assertEqual(account.to_dict()['seed'], self.encrypted_account['seed'])
-        self.assertEqual(account.to_dict()['private_key'], self.encrypted_account['private_key'])
-
-        account.serialize_encrypted = False
+        self.assertEqual(account.to_dict(encrypt_password=self.password)['seed'], self.encrypted_account['seed'])
+        self.assertEqual(account.to_dict(encrypt_password=self.password)['private_key'], self.encrypted_account['private_key'])
         self.assertEqual(account.to_dict()['seed'], self.unencrypted_account['seed'])
         self.assertEqual(account.to_dict()['private_key'], self.unencrypted_account['private_key'])

torba/tests/client_tests/unit/test_wallet.py

@@ -116,6 +116,12 @@ class TestWalletCreation(AsyncioTestCase):
 
 class TestTimestampedPreferences(TestCase):
 
+    def test_init(self):
+        p = TimestampedPreferences()
+        p['one'] = 1
+        p2 = TimestampedPreferences(p.data)
+        self.assertEqual(p2['one'], 1)
+
     def test_hash(self):
         p = TimestampedPreferences()
         self.assertEqual(

torba/torba/client/baseaccount.py

@@ -1,3 +1,4 @@
+import os
 import json
 import time
 import asyncio
@@ -221,12 +222,8 @@ class BaseAccount:
         self.seed = seed
         self.modified_on = modified_on
         self.private_key_string = private_key_string
-        self.password: Optional[str] = None
-        self.private_key_encryption_init_vector: Optional[bytes] = None
-        self.seed_encryption_init_vector: Optional[bytes] = None
-
+        self.init_vectors: Dict[str, bytes] = {}
         self.encrypted = encrypted
-        self.serialize_encrypted = encrypted
         self.private_key = private_key
         self.public_key = public_key
         generator_name = address_generator.get('name', HierarchicalDeterministic.name)
@@ -236,6 +233,12 @@ class BaseAccount:
         ledger.add_account(self)
         wallet.add_account(self)
 
+    def get_init_vector(self, key) -> Optional[bytes]:
+        init_vector = self.init_vectors.get(key, None)
+        if init_vector is None:
+            init_vector = self.init_vectors[key] = os.urandom(16)
+        return init_vector
+
     @classmethod
     def generate(cls, ledger: 'baseledger.BaseLedger', wallet: 'basewallet.Wallet',
                  name: str = None, address_generator: dict = None):
@@ -289,21 +292,20 @@ class BaseAccount:
             modified_on=d.get('modified_on', time.time())
         )
 
-    def to_dict(self):
+    def to_dict(self, encrypt_password: str = None):
         private_key_string, seed = self.private_key_string, self.seed
         if not self.encrypted and self.private_key:
             private_key_string = self.private_key.extended_key_string()
-        if not self.encrypted and self.serialize_encrypted:
-            assert None not in [self.seed_encryption_init_vector, self.private_key_encryption_init_vector]
+        if not self.encrypted and encrypt_password:
             private_key_string = aes_encrypt(
-                self.password, private_key_string, self.private_key_encryption_init_vector
+                encrypt_password, private_key_string, self.get_init_vector('private_key')
             )
-            seed = aes_encrypt(self.password, self.seed, self.seed_encryption_init_vector)
+            seed = aes_encrypt(encrypt_password, self.seed, self.get_init_vector('seed'))
         return {
             'ledger': self.ledger.get_id(),
             'name': self.name,
             'seed': seed,
-            'encrypted': self.serialize_encrypted,
+            'encrypted': bool(self.encrypted or encrypt_password),
             'private_key': private_key_string,
             'public_key': self.public_key.extended_key_string(),
             'address_generator': self.address_generator.to_dict(self.receiving, self.change),
@@ -322,6 +324,7 @@ class BaseAccount:
 
     @property
     def hash(self) -> bytes:
+        assert not self.encrypted, "Cannot hash an encrypted account."
         return sha256(json.dumps(self.to_dict()).encode())
 
     async def get_details(self, show_seed=False, **kwargs):
@@ -339,42 +342,41 @@ class BaseAccount:
             details['seed'] = self.seed
         return details
 
-    def decrypt(self, password: str) -> None:
+    def decrypt(self, password: str) -> bool:
         assert self.encrypted, "Key is not encrypted."
         try:
             seed, seed_iv = aes_decrypt(password, self.seed)
             pk_string, pk_iv = aes_decrypt(password, self.private_key_string)
         except ValueError:  # failed to remove padding, password is wrong
-            return
+            return False
         try:
             Mnemonic().mnemonic_decode(seed)
         except IndexError:  # failed to decode the seed, this either means it decrypted and is invalid
                             # or that we hit an edge case where an incorrect password gave valid padding
-            return
+            return False
         try:
             private_key = from_extended_key_string(
                 self.ledger, pk_string
             )
         except (TypeError, ValueError):
-            return
+            return False
         self.seed = seed
-        self.seed_encryption_init_vector = seed_iv
         self.private_key = private_key
-        self.private_key_encryption_init_vector = pk_iv
-        self.password = password
+        self.init_vectors['seed'] = seed_iv
+        self.init_vectors['private_key'] = pk_iv
         self.encrypted = False
+        return True
 
-    def encrypt(self, password: str) -> None:
+    def encrypt(self, password: str) -> bool:
         assert not self.encrypted, "Key is already encrypted."
         assert isinstance(self.private_key, PrivateKey)
-
-        self.seed = aes_encrypt(password, self.seed, self.seed_encryption_init_vector)
+        self.seed = aes_encrypt(password, self.seed, self.get_init_vector('seed'))
         self.private_key_string = aes_encrypt(
-            password, self.private_key.extended_key_string(), self.private_key_encryption_init_vector
+            password, self.private_key.extended_key_string(), self.get_init_vector('private_key')
         )
         self.private_key = None
-        self.password = None
         self.encrypted = True
+        return True
 
     async def ensure_address_gap(self):
         addresses = []

torba/torba/client/wallet.py

@@ -4,6 +4,7 @@ import stat
 import json
 import zlib
 import typing
+import logging
 from typing import List, Sequence, MutableSequence, Optional
 from collections import UserDict
 from hashlib import sha256
@@ -14,8 +15,18 @@ if typing.TYPE_CHECKING:
     from torba.client import basemanager, baseaccount, baseledger
 
 
+log = logging.getLogger(__name__)
+
+ENCRYPT_ON_DISK = 'encrypt-on-disk'
+
+
 class TimestampedPreferences(UserDict):
 
+    def __init__(self, d: dict = None):
+        super().__init__()
+        if d is not None:
+            self.data = d.copy()
+
     def __getitem__(self, key):
         return self.data[key]['value']
 
@@ -52,6 +63,7 @@ class Wallet:
     """
 
     preferences: TimestampedPreferences
+    encryption_password: Optional[str]
 
     def __init__(self, name: str = 'Wallet', accounts: MutableSequence['baseaccount.BaseAccount'] = None,
                  storage: 'WalletStorage' = None, preferences: dict = None) -> None:
@@ -59,6 +71,7 @@ class Wallet:
         self.accounts = accounts or []
         self.storage = storage or WalletStorage()
         self.preferences = TimestampedPreferences(preferences or {})
+        self.encryption_password = None
 
     @property
     def id(self):
@@ -119,15 +132,24 @@ class Wallet:
             ledger.account_class.from_dict(ledger, wallet, account_dict)
         return wallet
 
-    def to_dict(self):
+    def to_dict(self, encrypt_password: str = None):
         return {
             'version': WalletStorage.LATEST_VERSION,
             'name': self.name,
             'preferences': self.preferences.data,
-            'accounts': [a.to_dict() for a in self.accounts]
+            'accounts': [a.to_dict(encrypt_password) for a in self.accounts]
         }
 
     def save(self):
+        if self.preferences.get(ENCRYPT_ON_DISK, False):
+            if self.encryption_password:
+                self.storage.write(self.to_dict(encrypt_password=self.encryption_password))
+                return
+            else:
+                log.warning(
+                    "Disk encryption requested but no password available for encryption. "
+                    "Saving wallet in an unencrypted state."
+                )
         self.storage.write(self.to_dict())
 
     @property
@@ -139,6 +161,7 @@ class Wallet:
         return h.digest()
 
     def pack(self, password):
+        assert not self.is_locked, "Cannot pack a wallet with locked/encrypted accounts."
         new_data = json.dumps(self.to_dict())
         new_data_compressed = zlib.compress(new_data.encode())
         return better_aes_encrypt(password, new_data_compressed)
@@ -151,9 +174,12 @@ class Wallet:
 
     def merge(self, manager: 'basemanager.BaseWalletManager',
               password: str, data: str) -> List['baseaccount.BaseAccount']:
+        assert not self.is_locked, "Cannot sync apply on a locked wallet."
         added_accounts = []
         decrypted_data = self.unpack(password, data)
         self.preferences.merge(decrypted_data.get('preferences', {}))
+        if not self.encryption_password and self.preferences.get(ENCRYPT_ON_DISK, False):
+            self.encryption_password = password
         for account_dict in decrypted_data['accounts']:
             ledger = manager.get_or_create_ledger(account_dict['ledger'])
             _, _, pubkey = ledger.account_class.keys_from_dict(ledger, account_dict)
@@ -178,38 +204,35 @@ class Wallet:
         return False
 
     def unlock(self, password):
+        self.encryption_password = password
         for account in self.accounts:
             if account.encrypted:
-                account.decrypt(password)
+                if not account.decrypt(password):
+                    return False
         return True
 
     def lock(self):
+        assert self.encryption_password is not None, "Cannot lock an unencrypted wallet, encrypt first."
         for account in self.accounts:
             if not account.encrypted:
-                assert account.password is not None, "account was never encrypted"
-                account.encrypt(account.password)
+                account.encrypt(self.encryption_password)
         return True
 
     @property
     def is_encrypted(self) -> bool:
-        for account in self.accounts:
-            if account.serialize_encrypted:
-                return True
-        return False
+        return self.is_locked or self.preferences.get(ENCRYPT_ON_DISK, False)
 
     def decrypt(self):
-        for account in self.accounts:
-            account.serialize_encrypted = False
+        assert not self.is_locked, "Cannot decrypt a locked wallet, unlock first."
+        self.preferences[ENCRYPT_ON_DISK] = False
         self.save()
         return True
 
     def encrypt(self, password):
-        for account in self.accounts:
-            if not account.encrypted:
-                account.encrypt(password)
-            account.serialize_encrypted = True
+        assert not self.is_locked, "Cannot re-encrypt a locked wallet, unlock first."
+        self.encryption_password = password
+        self.preferences[ENCRYPT_ON_DISK] = True
         self.save()
-        self.unlock(password)
         return True