Table of Contents - Click to Open:
Paper wallet
THE BASICS of PAPER wallets
A Paper wallet is literally just a piece of paper on which currency codes are written. This paper can be:
- Written in pen on the back of a napkin
- Typed into a computer file and printed
- Created by generating a special document via a (free) dedicated paper-wallet generating program and then printed.
- A blank reminder form that comes with Hardware wallets
Along with these critical codes (your private key(s) and/or Seed phrase), you may also optionally choose to print the public key(s) and/or your receive currency address(es).
Paper wallets are ONLY good for long-term, very secure, storage of these codes. This is called “cold storage” because it is not connected to the internet (during storage), which keeps it very safe. It is usually the wallet of choice for larger holdings of currency. You can receive funds into a Paper wallet at any time, but you can’t spend them directly. Like a Hardware wallet, you will need a Software wallet to spend your Paper wallet currency.
GENERATING PAPER wallets
There are several free programs that can generate a Paper wallet. One option is to use BitAddress.org. A good Paper wallet generator should be able to generate a private key without accessing the internet. It is done “client-side” which means the software will run on your computer, not on some remote server.
By running client-side, your new private key will not have to be sent to you over the internet. This means that it can’t be intercepted by a hacker. BitAddress.org works this way, as should ALL Paper wallet generators. To prove it is not using the internet when it creates your keys you can go to that website, then disconnect your internet connection (unplug network cable or turn off WiFi) and run the program. You will see that it works without internet. In fact, for security, you should always generate Paper wallets with the internet disconnected.
Additionally, while the computer (and printer) are still offline you should also print your paper wallet.
return to TOC
QR CODES of PAPER wallets
If you use a program (like the one above) to generate the Paper wallet, then it will also generate two corresponding QR code images. These QR codes represent your private key and receive address. A QR code image serves a similar purpose to a common everyday product barcode – i.e. you can use a scanner to read the keys rather than needing to type each digit by hand. You can show the receive address and QR code to other people so that they can scan it with their wallet scanner and send funds to your address.
As always, the private key (and the private QR code) must be kept an absolute secret. No one except you should ever see it. It will be used only when you want to spend your funds.
return to TOC
GIFTS of PAPER wallets
Besides being a very secure and long-term way to store your funds, a Paper wallet can also be used as a gift. Say you wanted to give cryptocurrency as a gift to friends, family or kids. You could generate a Paper gift wallet for each person. Then, using some other cryptocurrency wallet you have, you would send currency to each Paper gift wallet. When the person receives the wallet they can spend the coins immediately, or keep them, or even regift them. But do make sure that you also explain how to keep the wallet safe.
return to TOC
MONITOR YOUR ACCOUNT of PAPER wallets
To safely monitor the account balance of your Paper wallet you have two options. You can enter the receive address on various cryptocurrency “monitor” websites. For example, you can enter each of your receive addresses in the search box at BlockChain.info and it will safely check your currency account balance without risking your private keys. Alternatively, you can also create a “watch-only” software wallet (Web, Mobile, or Desktop) to do the monitoring of all of your receive addresses on a regular basis.
return to TOC
SPEND YOUR FUNDS of PAPER wallets
To spend your coins in your Paper wallet you will need to set up one of the other non-Paper and non-custodial wallet types. I.e. a Mobile, Desktop, Hardware and some Web wallets. You will NOT be able to use an Exchange wallet to directly spend your Paper wallet coins. You will need to enter your paper private keys into that other wallet by typing them or scanning the private QR code (which you may have printed when you first created the Paper wallet.) If you previously set up a “watch-only” wallet then you may be able to use that same wallet in “spend mode”. An Exchange wallet can’t be used for this since you can’t add your own private keys to that type of wallet.
return to TOC
SECURITY of PAPER wallets
As with all wallets, there are also security risks associated with Paper wallets. They can occur during all stages of a Paper wallet’s life: During creation, storage, and spending stage. Here are some examples times when your Paper wallet private keys could be exposed and/or lost:
- PRINTER LEAKS: Printing your wallet on WiFi enabled printer, or even printing while connected to an internet connected computer could allow a hacker to get a copy of your keys. Or using a printer connected to any computer which could have a virus. Or using a printer which keeps copies of your recently printed documents (especially common in work computers)
- SOLUTIONS: Disconnect the internet and WiFi from your printer and computer when generating and printing a paper wallet and virus scan your computer before generating/printing your Paper Wallet. And don’t use a Paper wallet generator that won’t run without an internet connection.
- KEYS LOST: Your Paper wallet could be lost, stolen, destroyed, burned, discarded, flooded, or even eaten by your pet. If you lose your private keys, then your money is gone forever.
- SOLUTIONs: Put Paper wallets into a fireproof locked location (like a good home safe, or bank safe deposit box).
- Print on a durable material and use high-quality ink (or invisible ink). Consider laminating the paper to make it waterproof. Or use a “Paper wallet” which is actually made of metal. See examples below.
- Store copies in different physically remote locations (but the more copies you have, the more opportunities a thief has to find them)
- KEYS FOUND: Your Paper wallet could be easily found by someone and its meaning will be somewhat obvious – why else would you write down a ridiculously long sequence of digits and letters if it wasn’t a cryptocurrency address. There could be no other logical explanation. If you stored a copy of your paper wallet on your hard drive, then this could be found.
- SOLUTIONS: Hide it well – but not so well that you never remember where it is.
- Don’t take a photo of your Paper wallet (the photo can accidentally wind up on the internet)
- Digitally Erase and Wipe computer files so it is impossible to recover them (“delete” does not do enough)
- Create a “multi-sig” paper wallet so that it will take more than one private key to spend funds. This means a different private key recorded on a different piece of paper and stored in a different location.
- TRANSCRIPTION ERRORS: You could hand write and make an error in the (very) long sequence of letters and numbers and you would never know it until you try to spend it (Ddduuuuhhhhhh!!!)
- SOLUTION:If hand writing your key then triple check the what you write compared to what you see on the computer.
One of the downsides of a Paper wallet is that, for convenience’s sake, Paper wallet owners tend to reuse the same receive address for all income into that wallet. Most other (non-paper) wallets will generate a new receive address for each transaction. This is a privacy issue, for you and those who are sending funds to you. Using the same receive address for many transactions creates “footprints” to your doorstep and it is a slow but potential way to connect the dots and figure out EXACTLY who you are (over time). The more currency that a hacker can determine that you own in that wallet, the more she is likely to try to track you down and steal your coins. But no thief can be sure what type of wallet you are using. By repeatedly using the same receive address they will only be able to figure out that, whoever you are, and wherever you live, you are rich in crypto.
DON’T LOSE YOUR PRIVATE KEYS AND DON’T LET OTHERS SEE THEM OR THERE IS A VERY GOOD CHANCE YOUR CURRENCY WILL BE STOLEN.
return to TOC
FEATURE SUMMARY of PAPER wallets
Not much to say about features:
- SECURITY: With proper precautions, this wallet can be extremely secure during the storage cycle.
return to TOC
BACK UP of PAPER wallets
Often to backup of most other wallet types is to write/print the HD Seed phrase on paper. For a Paper wallet a backup is just one more copy of your paper wallet, preferably stored in a physically separate location.
return to TOC
PROS / CONS of PAPER wallets
The following pros and cons are generalizations of what makes this wallet type uniquely different from most other wallet types.
Pros:
- COLD STORAGE: THIS IS THE BIG PRO! Makes electronic theft (DURING LONG TERM STORAGE) very difficult.
- GIFTS: Easy to give as a gift.
- HIGH SECURITY: With proper precautions, this wallet can be extremely secure.
Cons:
- ADDITIONAL WALLET: You will still need another wallet type to spend this wallet
- ADDRESS REUSE: Reuse of same public address when receiving funds (a privacy issue)
- INCONVENIENT: Not easily nor quickly spendable
- KEYS LOST: Your Paper wallet could be lost, stolen, destroyed, burned, discarded, flooded, or even eaten by your pet.
- NO WATCH: Doesn’t show your current account balance without an extra “Watch-only” wallet.
return to TOC
EXAMPLE of PAPER wallets
A Paper wallet is almost always simply made of paper and can optionally be created here: https://www.bitaddress.org But one interesting example of a Paper wallet made from metal is CRYPTOSTEEL
return to TOC
GET STARTED of PAPER wallets
To get started with this type of wallet you will go to a wallet generator website, such as https://www.bitaddress.org. Disconnect your internet/WiFi and follow that website’s instructions to create a private key. Then record the key that is generated by writing it down and/or follow offline safety procedures to print the paper wallet that will be generated. Then, using the currency address generated by the program, transfer currency to that address. This currency can come from your Exchange wallet, from some other wallet you own, or someone can send currency to you. Then put the paper in a very safe place, such as a bank vault. You may also optionally make copies of the wallet to be saved in other secure locations. If you lose all copies of your paper wallet then your currency is gone for good. If someone else finds your paper wallet then they could easily steal the currency represented by that wallet.
DISCLAIMER: Although we have referenced Paper wallets and the website https://www.bitaddress.org this does not mean that we are certifying that either one is safe to use. We only reference them because hey are well known for this purpose. Do your own research, follow all security procedures, and use them at your own risk.