Everything you need to Know about Paper Wallets
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When you buy cryptocurrencies, you have to secure them until you decide to sell or buy some more. But since they are intangible assets, you can’t withdraw them. Cryptocurrencies are stored in a variety of applications and hardware devices. Alternatively, you can store them in a paper wallet.
What is a Paper Wallet?
- The public key is the address you would give anyone you wish to receive bitcoins from.
- The private key is the address you use when sending bitcoins to other people.
So, what is a paper wallet? What is paper wallet used for? A paper wallet, therefore, is a physical document with copies of these two keys. A typical paper wallet for bitcoin will often have QR codes so that you can easily scan them whenever you need to complete a transaction.
The idea behind Paper Wallets
- Soon after bitcoin was officially launched in 2010; alternative cryptos known as ‘altcoins’ began to crop up.
- These coins offered almost similar services to bitcoins but with the exception that they were cheaper or offered faster means of transacting.
- The altcoins also offered online platforms to help you store your coins. In 2011, a wave of malware attacks against altcoins swept the industry, lending some popular altcoins bankrupt.
- Everyone who stored their altcoins on these platforms also lost their savings.
Over time, bitcoin solution providers saw a need to provide offline means of safeguarding bitcoins. By early 2013, paper wallet for BTC began flocking the market. Some of the wallets were in the form of flash drives that could be stored in a safe box. While physical wallets provided the safety software wallets failed at, they had the drawback of being vulnerable to virus attacks. This popularized the idea of paper wallets where you could key in your private and public bitcoins and store the paper at an undisclosed location.
Pros and Cons of Paper Wallets
- Secure- you will feel comfortable knowing that your bitcoins can’t be hacked or get attacked by malware.
- Easy to use- paper wallet bitcoins are the easiest to use. Simply key in your private and public keys and store the document privately. You are safe.
- Setting up a paper wallet is easy and often free of charge.
- Can be stolen- your bitcoin paper wallet can get snatched by someone else anytime.
- Easy to confiscate
- Vulnerable to human errors such as forgetting where you stored it.
How do Paper Wallets work?
Paper wallets work by storing the most important components of your bitcoin in an offline form:-
- You generate a paper wallet on a software program where you get unique bitcoin transaction keys.
- You then print these keys and store them on a piece of paper or as a PDF document.
However, there is a unique aspect of how paper wallets work that makes them a little bit more secure. Most paper wallets are QR code readable. This offers a layer of security when transacting online. This does not make them absolutely secure as you will later see in this guide.
How to Make Paper Wallets
Generating a paper wallet is quick, easy and often free of charge. All the tools you need for this paper wallet making process are available on open sources. Basically, you use a software program to generate unique private and public keys for your bitcoin. You can generate a paper wallet either online or offline. But to make the process completely secure, it’s best to do it offline. Here is how to make a paper wallet.
What you need:
- A computer with secure Internet connection
- A paper document to record the keys
- Google Chrome browser if you need a PDF copy of your bitcoin keys
With these tools, follow our guide below to generate your first paper wallet:
- Visit paper wallet generator, BitAddress.org or Walletgenerator.org. For litecoin, visit LiteAdress.org.
- With BitAdress.org, you can create your unique keys by clicking on the cursor on their platform.
- Either way, both BitAdress.org, and Walltergenerator.org will provide you with unique keys plus their unique QR codes in a few minutes.
- Click ‘Print paper wallet’ on BitAddress.org to select the addresses to generate.
- Click ‘Print’ to make a hard copy of your generated bitcoin keys.
- Store your paper wallet in a secure location.
On Wallet Generator.org, download an “index.html” file by clicking the “print the paper wallet” tab. Print on the highest quality setting.
- Turn your Internet connection off.
- Open the index.html file and hover your mouse over its characters to create random characters.
- As you help generate random keys, there will be a countdown.
- Once the countdown gets to zero, your public and private keys plus their unique QR codes are generated.
- Print the page, make copies but note to delete the web-version of it.
- Store your generated paper wallet in a secure location.
Are Paper Wallets secure?
Are paper wallets safe? Paper wallets critiques discredit paper wallets for being highly vulnerable to human errors, damage or even hacking vulnerabilities as you use them to complete transactions. Paper wallets are often considered insecure due to the following reasons:
- Vulnerable to theft- if you don’t secure your paper wallet, anyone who sees it can steal it. Anyone who takes a picture of your keys and QR codes can also use it to withdraw your coins.
- Easy to damage- paper is easily damaged when exposed to water, sharp objects or even rough handling.
- The quality of transacting with a poorly printed paper wallet could affect you.
- Prone to human errors- you could tear your only paper wallet unintentionally. You could also forget where you stored it and lose all your savings.
Secure your paper wallet by following these strategies:
- When generating your paper wallet, ensure that your Internet connection is off.
- Keep your paper wallet in a safe box at a location only you can access.
- Do not store digital copies of your paper wallet-Avoid the PDF copies as well.
- Always fold the paper before storing it to ensure that a photograph of your keys can’t be taken by anyone.
Other Kinds of Wallets beside Paper Wallets
There are several types of wallets, but they can be distinguished into two: online wallets and offline wallets. Here is a list of the common wallets, their pros, and cons.
Online wallets store your private and public bitcoin keys in the cloud. To join, simply create an account on a trusted cloud-based wallet provider such as coinbase.
- Quick to access
- Some are highly secure
- Vulnerable to cybercrime
- You are putting trust in someone else to safeguard your coins.
These wallets come in the form flash drives and memory sticks. They are similar to paper wallets in that you store your coins offline. Hardware wallets are the safest option today.
- Easy to access.
- Not vulnerable to cybercrimes.
- Great for holding large amounts of bitcoin for long.
- Vulnerable to human errors.
A desktop wallet is designed to be downloaded on a personal computer.
- Easy to access
- Available for almost all operating systems
- Some are highly secure
- Vulnerable to malware attacks
- You could lose your cryptos should you lose or damage your personal computer.
Client wallets are the original wallets created by bitcoins for use by the network’s customers. BitcoinQt and Electrum are two of the most popular client wallets.
- Easy to use
- Highly secure
- Can store a variety of cryptocurrencies
- Some network wallets do not accept outsider coins.
- Vulnerable to malware
The bitcoin industry is more secure with the wide array of wallets available. And while some of these wallets have huge drawbacks, paper wallets are still a good option beginners.
Thank you for reading along, Stay updated about the latest wallets joining the market by visiting our website often.