In this article I am going to explain you what a paper wallet is and how you can make one yourself.
What is a paper wallet and why do I need one?
To put it really simple, it is a piece of paper or document that is holding one or multiple private keys, which can be used to access your bitcoins. Often it comes with a QR code to scan and make transactions within your software wallet. That’s right you still need to have a software wallet to be able to make transactions.
It contains all the necessary data to generate a bitcoin private key. A wallet generally consists of two keys: The public key and the private key.
- The public key is the one that you use to receive coins from other people.
- The private key is the one you use to send coins and it is the key you want to keep secret.
The combination of the two makes a cryptocurrency transaction possible. It is important to understand that if someone gets hold of your private key, they can withdrawal your crypto coins. Storing the private key on a device that is connected to the internet can allow hackers to access this information and therefore steal your coins. If you have your phone or computer stolen, that can also mean bye bye to the crypto treasure.
To prevent such a thing from happening you can store your crypto coins on a paper wallet.
What are the Pro’s and Con’s of having a paper wallet?
- Very cheap in most cases even free
- It is not connected to the internet (no hackers or cyber attacks)
- The paper wallet is not saved on an electronic device, so no chance of hardware failure
- Paper an ink can easily fade
- Paper burns
- If you lose your paper you can never access the coins send to your address.
How to make a paper wallet?
- We need to create a new coin address. BitAdress.com or walletgenerator.net can help with that buy randomly typing in characters or by moving the mouse around.
- Turn of your internet connectiion
- This will create your public and private keys and their respective QR codes. Do not scan these
- Click the ‘Paper wallet’ tab.
- Select the number of addresses you want to generate.
- Click the ‘Generate’ button to create new wallets.
- Once the wallet is generated, click the ‘Print’ button to make a hard copy.
- Write down the public addresses, or scan the public address QR code in your bitcoin (or litecoin) app and start depositing funds.
- Done, you just created your first paper wallet
What about the security of my paper wallet?
Potentially you have a lot of money stored on your paper wallet, so you want to be extra save and make sure no one knows or sees you making a paper wallet.
- You can also get two factor authentication for your paper wallet, for example a passphrase and your wallet
- make sure you use a computer and operating system that has no malware installed
- You should be able to turn the internet connection off while you create a random key
- Print the paper wallet from a printer that is not connected to the web
Tips to keep your paper wallet safe
- laminating your paper wallet or putting it in a sealed plastic bag is a good idea to keep it away from getting damp or wet
- Lock it up in a safe
- You can also hand it to a person that you trust and get them to keep it
- additioanlly you can create a couple and store them away in safe places or with your solicitor
What is a paper wallet, conclusion?
So as you can see the paper wallet is very cheap to make and it is fairly safe since its information is kept offline. You do run the risk of losing it or more of the ink to fade. They are a quick way to keep your coins safe but they are also limited to which coins you can store in them. This review was just about the bitcoin wallet.
If you like the idea of having an offline storage but are concerned about fire or water or a hurricane to destroy your wallet check out the Cryptosteel for another option and also be sure to read about the hardware wallets in my other articles.