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I would like to backup my data in an encrypted format. My plan is to use two encrypted hard drives.

Is it more likely that I would lose the whole drive if I use the entire disk encryption versus many smaller containers?

My thoughts are that if the disk gets corrupted it would be more likely to damage a container or two instead of making my whole drive worthless.

I'm hoping that I just don't understand how it works and an encrypted drive is just as recoverable.

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up vote 4 down vote accepted

No. Both methods are vulnerable to damage due to bad disk blocks, but you won't lose a whole TrueCrypt volume unless the main volume header and the backup header for the container are both overwritten or otherwise corrupted. The main header is at the start of the volume and the backup is at the end, so a single event wiping them both is unlikely. Keep one or more copies of the volume header on separate media and you further mitigate this risk. (TrueCrypt has built-in support for the creation and use of such backups.)

Once you backup the volume header then your nominal risk is the same whether you use block devices or file containers. Your archive will be as reliable as the filesystem used within the TrueCrypt volume.

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Is backing up the volume header something you have to do constantly or just once? –  Blankasaurus May 20 '12 at 22:46
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You should backup the header each time you change the volume password or required keyfiles, so that if you use the backup to recover the volume the same password and keyfiles will be required. Other than that, once is enough for header backups. –  Kyle Jones May 21 '12 at 0:22
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