So Alan how is it going with the usability issue? I don't mean to be demanding but would like it if you can give me some time frame.
I made a lot of progress on the persistent blockchain stuff, but when I realized I couldn't finish it before the conference, I decided I had to finish this feature instead. I may not have mentioned it here, but a friend paid for an exhibitor booth at the conference, and he and his buddy are running (and I'll be there, too). And we got a good location, too, by the door. We'll be doing lots of demos. I decided having the super-backup system (at least in demo) was worth delaying the persistent blockchain stuff by a week.
I made a lot of good progress on the persistent blockchain stuff, but it'll probably still be a couple weeks after the conference before it's ready.
Is it already possible to have encrypted paper backup with a custom password? Does the encryption for the paper backup also use some key-stretching (like scrypt, pkbdf2)?
(1) The encryption uses the same key-stretching as is used for wallet encryption which is a simpler (but less flexible) version of scrypt. It's hardcoded to use 16 MB of RAM per thread, which means it must do 262,144 SHA512 invocations, and keep each step in RAM as a lookup table to use for 144k lookup operations. This will take older computers a second or two, but it will be done so infrequently, I decided, I should err on the side of taking too long.
(2) There is no custom passphrase. However, the intention of M-of-N was to replace that. An encrypted backup is just a 2-of-2 backup -- requiring the paper, and the password in your head. You can, instead, do a 2-of-2 backup with the new utility, and think of one sheet being the encryption key for the other. But with this, you get an extremely flexible tradeoff of security and redundancy. M is how much "security" you want, and N is how much redundancy you want (well, N-M).
I've ranted before about the dangers of having an encrypted paper backup option, because it's the one place where users
should not always pick the "best-sounding" option .. i.e. "Oh yeah, encrypt everything, great!". I have seen probably 200+ BTC lost to forgotten passphrases. It's tough to have the encrypted backup option while still encouraging people to have at least one unencrypted backup, somewhere. Or rather, prevent people from unwittingly creating brainwallets.