What are possible drawbacks of using TrueCrypt? Do I risk losing my data in case of some disk error?
Positive things: better data confidentiality - without your passphrase, it is virtually impossible to access your data. Assuming your passphrase is secure enough, and you're not forced to give it to someone. And assuming disk is offline - obviously malware/spyware can still access the data, when encrypted disk is in use.
There's two distinct cases: full disk encryption and disk images. In both formats, there's TrueCrypt header at the beginning of encrypted partition. This disk header is essential for accessing the contents, as your passphrase is only used to decrypt encryption key stored on the header. That encryption key is then used for disk encryption/decrypting.
With full system encryption, Truecrypt requires burning restore CD. That can be used to restore corrupted disk header, due to disk failure or data corruption. With that it is possible to decrypt disk, even if disk header is corrupted. Restoring disk contents using some commercial service might be even more expensive/impossible.
With disk images, there's no mandatory backup of disk header. Therefore, even a single-bit corruption in the beginning of disk destroys all contents (does not destroy, but you have no way to access that anymore).
Quote from Truecrypt FAQ:
If the header is not corrupted, a single-bit corruption only corrupts 16 bytes (i.e 0.00000149% of one gigabyte). Single-bit errors happen randomly. That is called bit rot.
As with any computer system, with encrypted device, it is a good idea to take backups. If possible, do not back up encrypted disk (images), as any problem with TrueCrypt will ruin the backups. It is really advisable to encrypt backups with different system, for example, with PGP.
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