diff --git a/cluefs_frontend/fe_fs.go b/cluefs_frontend/fe_fs.go
index 2b12da6..9d677b2 100644
--- a/cluefs_frontend/fe_fs.go
+++ b/cluefs_frontend/fe_fs.go
@@ -27,7 +27,7 @@ type nullTracer struct {}
 
 func (nullTracer) Trace(op cluefs.FsOperTracer) {}
 
-func NewFS(key [16]byte, backing string, useOpenssl bool) (*FS, error) {
+func NewFS(key []byte, backing string, useOpenssl bool) (*FS, error) {
 	var tracer nullTracer
 	clfs, err := cluefs.NewClueFS(backing, tracer)
 	if err != nil {
diff --git a/cryptfs/config_file.go b/cryptfs/config_file.go
index 752ed09..5651716 100644
--- a/cryptfs/config_file.go
+++ b/cryptfs/config_file.go
@@ -1,7 +1,6 @@
 package cryptfs
 
 import (
-	"errors"
 	"io/ioutil"
 	"encoding/json"
 )
@@ -17,23 +16,30 @@ const (
 )
 
 type confFile struct {
-	// File the config is saved in. Lowercase => not exported to JSON.
+	// File the config is saved to. Not exported to JSON.
 	filename string
-	// Unencrypted AES key
-	Key [16]byte
-	// GCM ciphertext with auth tag to verify the key is correct
-	TestBlock []byte
+	// Encrypted AES key, unlocked using a password hashed with scrypt
+	EncryptedKey []byte
+	// Stores parameters for scrypt hashing (key derivation)
+	ScryptObject scryptKdf
 }
 
-// CreateConfFile - create a new config file with "key" and write to "filename"
-func CreateConfFile(filename string, key [16]byte) error {
+// CreateConfFile - create a new config with a random key encrypted with
+// "password" and write it to "filename"
+func CreateConfFile(filename string, password string) error {
 	var cf confFile
 	cf.filename = filename
-	cf.Key = key
 
-	// Generate test block
-	cfs := NewCryptFS(cf.Key, false)
-	cf.TestBlock = cfs.EncryptBlock([]byte(testBlockData))
+	// Generate new random master key
+	key := RandBytes(KEY_LEN)
+
+	// Generate derived key from password
+	cf.ScryptObject = NewScryptKdf()
+	scryptHash := cf.ScryptObject.DeriveKey(password)
+
+	// Lock master key using password-based key
+	cfs := NewCryptFS(scryptHash, false)
+	cf.EncryptedKey = cfs.EncryptBlock(key)
 
 	// Write file to disk
 	err := cf.WriteFile()
@@ -41,34 +47,39 @@ func CreateConfFile(filename string, key [16]byte) error {
 	return err
 }
 
-// LoadConfFile - read config file from disk and verify the key using the
-// embedded TestBlock
-func LoadConfFile(filename string) (*confFile, error) {
+// LoadConfFile - read config file from disk and decrypt the
+// contained key using password
+func LoadConfFile(filename string, password string) ([]byte, error) {
+	var cf confFile
+	cf.filename = filename
+
 	// Read from disk
 	js, err := ioutil.ReadFile(filename)
 	if err != nil {
 		return nil, err
 	}
-	var cf confFile
+
+	// Unmarshal
 	err = json.Unmarshal(js, &cf)
 	if err != nil {
+		Warn.Printf("Failed to unmarshal config file\n")
 		return nil, err
 	}
-	cf.filename = filename
 
-	// Try to decrypt the test block to see if the key is correct
-	//
-	// Speed does not matter here. Use built-in crypto.
-	cfs := NewCryptFS(cf.Key, false)
-	d, err := cfs.DecryptBlock(cf.TestBlock)
+	// Generate derived key from password
+	scryptHash := cf.ScryptObject.DeriveKey(password)
+
+	// Unlock master key using password-based key
+	// We use stock go GCM instead of OpenSSL here as speed is not important
+	// and we get better error messages
+	cfs := NewCryptFS(scryptHash, false)
+	key, err := cfs.DecryptBlock(cf.EncryptedKey)
 	if err != nil {
+		Warn.Printf("Failed to unlock master key: %s\n", err.Error())
 		return nil, err
 	}
-	ds := string(d)
-	if ds != testBlockData {
-		return nil, errors.New("Invalid test block content: " + ds)
-	}
-	return &cf, nil
+
+	return key, nil
 }
 
 // WriteFile - write out config in JSON format to file "filename.tmp"
diff --git a/cryptfs/cryptfs.go b/cryptfs/cryptfs.go
index 8927d74..6380a92 100644
--- a/cryptfs/cryptfs.go
+++ b/cryptfs/cryptfs.go
@@ -3,6 +3,7 @@ package cryptfs
 // CryptFS is the crypto backend of GoCryptFS
 
 import (
+	"fmt"
 	"crypto/cipher"
 	"crypto/aes"
 )
@@ -21,16 +22,22 @@ type CryptFS struct {
 	cipherBS uint64
 }
 
-func NewCryptFS(key [16]byte, useOpenssl bool) *CryptFS {
+func NewCryptFS(key []byte, useOpenssl bool) *CryptFS {
 
-	b, err := aes.NewCipher(key[:])
+	if len(key) != KEY_LEN {
+		panic(fmt.Sprintf("Unsupported key length %d", len(key)))
+	}
+
+	b, err := aes.NewCipher(key)
 	if err != nil {
 		panic(err)
 	}
 
 	var gcm cipher.AEAD
 	if useOpenssl {
-		gcm = opensslGCM{key}
+		var k16 [16]byte
+		copy(k16[:], key)
+		gcm = opensslGCM{k16}
 	} else {
 		gcm, err = cipher.NewGCM(b)
 		if err != nil {
diff --git a/cryptfs/kdf.go b/cryptfs/kdf.go
new file mode 100644
index 0000000..275c72e
--- /dev/null
+++ b/cryptfs/kdf.go
@@ -0,0 +1,38 @@
+package cryptfs
+
+import (
+	"fmt"
+	"golang.org/x/crypto/scrypt"
+)
+
+const (
+	// 1 << 16 uses 64MB of memory,
+	// takes 4 seconds on my Atom Z3735F netbook
+	SCRYPT_DEFAULT_N = 1 << 16
+)
+
+type scryptKdf struct {
+	Salt []byte
+	N int
+	R int
+	P int
+	KeyLen int
+}
+
+func NewScryptKdf() scryptKdf {
+	var s scryptKdf
+	s.Salt = RandBytes(KEY_LEN)
+	s.N = SCRYPT_DEFAULT_N
+	s.R = 8 // Always 8
+	s.P = 1 // Always 1
+	s.KeyLen = KEY_LEN
+	return s
+}
+
+func (s *scryptKdf) DeriveKey(pw string) []byte {
+	k, err := scrypt.Key([]byte(pw), s.Salt, s.N, s.R, s.P, s.KeyLen)
+	if err != nil {
+		panic(fmt.Sprintf("DeriveKey failed: %s", err.Error()))
+	}
+	return k
+}
diff --git a/main.go b/main.go
index 6315805..77b9c10 100644
--- a/main.go
+++ b/main.go
@@ -55,10 +55,7 @@ func main() {
 		}
 		dir, _ := filepath.Abs(flag.Arg(0))
 		filename := filepath.Join(dir, cryptfs.ConfDefaultName)
-		r := cryptfs.RandBytes(cryptfs.KEY_LEN)
-		var key [16]byte
-		copy(key[:], r)
-		err := cryptfs.CreateConfFile(filename, key)
+		err := cryptfs.CreateConfFile(filename, "test")
 		if err != nil {
 			fmt.Println(err)
 			os.Exit(ERREXIT_INIT)
@@ -86,20 +83,20 @@ func main() {
 		fmt.Printf("Please run \"%s --init %s\" first\n", PROGRAM_NAME, cipherdir)
 		os.Exit(ERREXIT_LOADCONF)
 	}
-	cf, err := cryptfs.LoadConfFile(cfname)
+	key, err := cryptfs.LoadConfFile(cfname, "test")
 	if err != nil {
 		fmt.Println(err)
 		os.Exit(ERREXIT_LOADCONF)
 	}
 
 	if USE_CLUEFS {
-		cluefsFrontend(cf.Key, cipherdir, mountpoint)
+		cluefsFrontend(key, cipherdir, mountpoint)
 	} else {
-		pathfsFrontend(cf.Key, cipherdir, mountpoint, debug)
+		pathfsFrontend(key, cipherdir, mountpoint, debug)
 	}
 }
 
-func cluefsFrontend(key [16]byte, cipherdir string, mountpoint string) {
+func cluefsFrontend(key []byte, cipherdir string, mountpoint string) {
 	cfs, err := cluefs_frontend.NewFS(key, cipherdir, USE_OPENSSL)
 	if err != nil {
 		fmt.Println(err)
@@ -138,7 +135,7 @@ func cluefsFrontend(key [16]byte, cipherdir string, mountpoint string) {
 	os.Exit(0)
 }
 
-func pathfsFrontend(key [16]byte, cipherdir string, mountpoint string, debug bool){
+func pathfsFrontend(key []byte, cipherdir string, mountpoint string, debug bool){
 
 	finalFs := pathfs_frontend.NewFS(key, cipherdir, USE_OPENSSL)
 
diff --git a/pathfs_frontend/fs.go b/pathfs_frontend/fs.go
index 1e4a1f3..5a52cfc 100644
--- a/pathfs_frontend/fs.go
+++ b/pathfs_frontend/fs.go
@@ -19,7 +19,7 @@ type FS struct {
 }
 
 // Encrypted FUSE overlay filesystem
-func NewFS(key [16]byte, backing string, useOpenssl bool) *FS {
+func NewFS(key []byte, backing string, useOpenssl bool) *FS {
 	return &FS{
 		CryptFS:     cryptfs.NewCryptFS(key, useOpenssl),
 		FileSystem:  pathfs.NewLoopbackFileSystem(backing),