A paper wallet for cryptocurrencies is one of the ways to store digital coins offline, without an internet connection. This type of storage was extremely popular immediately after the appearance of bitcoin, but now its popularity has declined due to the improvement of software and hardware wallets – now paper is not the only safe method.
The Profinvestment.com editorial team will tell you about the features, benefits and risks of paper crypto wallets.
What is a paper wallet?
These are keys and QR codes for accessing the wallet, printed on a sheet of paper in physical form. Serve for carrying out cryptocurrency transactions. They are very safe due to their isolation from the Internet, however, there are also a lot of risks.
To create a paper wallet for bitcoin cryptocurrency, visit the website of one of the special generators, which will randomly generate keys and QR codes. It is recommended to turn off Internet access while generating keys, and at the end of the procedure, erase the browsing history in the browser. Ideally, create a wallet on a brand new device that is guaranteed to be free of any spyware.
The generated keys are then sent to print. In the future, in order to access the funds, you will need to scan QR codes using a hot wallet – connected to the Internet.
A paper wallet helps protect BTC from digital attacks, malware, and more. If used correctly, the likelihood of an attacker accessing the tool is virtually impossible. Another issue is the security of the physical document itself. Let’s consider the risks of using paper storage in more detail.
Risks of Using Paper Cryptocurrency Wallets
Although the hacker does not have access to the printed paper keys, there are other ways to get them. Here are the main security concerns of this kind of wallet:
✅ Printers connected to large networks often store information that is printed to them. Accordingly, anyone can watch it later. Shared printers (in internet cafes, schools, etc.) are usually centrally controlled and also allow you to connect to them via Wi-Fi.
✅ During key generation, malware can intercept it.
✅ It is not possible to use a new address for each incoming transaction.
✅ You need software that understands exactly the format of the private key that is used in a paper cryptocurrency wallet. There was at least one post on Reddit that updating the private key formats left the user’s funds simply stuck.
✅ You cannot check the receipt of funds without connecting to the Internet, that is, the security is partially reduced.
✅ Poor quality ink fades over time, making text unreadable. QR codes are generally not originally designed for secure storage of cryptographic data – even simple folding of the sheet can make the code unreadable.
✅ The paper may tear, get wet, burn, or otherwise be damaged.
✅ Lack of understanding by users of the principle of work. So, there were many cases when newbies created a paper wallet, then spent funds using a software wallet, believing that the cryptocurrency still remained on the paper wallet. And many other examples.
✅ Paper crypto wallets are created by websites. Thus, there is a risk of keys being stolen either by developers or by hackers who will break into the site.
For these reasons, many crypto enthusiasts believe that the paper-based storage method is outdated, and it is better to focus on storing not keys, but seed-phrases.
Tips for storing cryptocurrency on paper
If you still consider it advisable to use a paper wallet for cryptocurrencies, then take appropriate measures to preserve it.
Laminate the paper so it doesn’t rip or fade. Keep your wallet where only you can reach. If we are talking about large amounts, it would be wise to purchase a safe with a code. Alternatively, a Cryptosteel mechanical device or equivalent can be used to help securely store keys, passwords, and SEED mnemonic phrases.
You can create multiple copies, each of which contains only part of the key or seed phrase. Even if someone finds one copy, they will not be able to access the funds. It looks like this:
How to create a paper bitcoin wallet?
There are two ways to generate this type of storage.
Lightweight but less reliable
- Go to bitaddress.org – this is open source software specifically for creating paper wallets for the Bitcoin cryptocurrency.
- Move the cursor over the field with symbols or enter random text in the field provided for this. These steps will help you generate a random private key.
- Select the Paper Wallet option and click Print to print the result. You can also add a password for additional wallet encryption.
The process takes no more than a minute and allows you to generate as many addresses as you want at a time, all will be different and unique.
Sophisticated but more reliable
If you intend to store really large amounts of BTC in a paper wallet, then take care of additional protection – it is worth the effort.
First you need to acquire the following tools:
✅ Ubuntu operating system https://www.ubuntu.com/download/desktop.
✅ Software for installing Ubuntu on a USB stick http://www.linuxliveusb.com/en/download.
✅ Completely new, formatted USB stick.
✅ BitAddress software for creating a paper wallet https://github.com/pointbiz/bitaddress.org/archive/master.zip.
Then follow a few steps:
- Install on the Ubuntu USB stick using the LiLi program.
- Unzip the downloaded BitAdrress file and copy it to your flash drive.
- Disconnect the computer from the Internet, completely eliminating the possibility of remote connection to it.
- Boot using Ubuntu installed on a USB flash drive.
- Configure the printer in the operating system (add it in the settings, print a test page).
- Open BitAddress, create a new paper wallet locally and print it out. This is done in a private browser window by going to file: //cdrom/bitaddress.org-master/. The creation process itself is no different from the usual one used in the light version.
This method is much safer, because in the process you are not connected to the Internet, you use a standalone version of BitAddress that cannot be hacked from the outside, as well as an operating system that is considered to be as secure as possible from malware penetration.
Advantages and disadvantages of paper crypto wallets
✅ Protection against malware, keyloggers, Trojans and viruses.
✅ Protection against hacker attacks.
✅ Safe against tax or law enforcement interference.
✅ No fees for opening, storage.
❌ The possibility of stealing keys at the time of generation or printing.
❌ Physical wear and tear of paper.
❌ Possible private key format mismatch.
❌ You cannot use a new address for each incoming transaction.
❌ A paper wallet is not practical for frequent transactions.
Questions and answers
What is a cryptocurrency paper wallet?
This is a paper-based set of private keys required to access digital assets.
How to use a paper wallet?
To replenish it, it is enough to transfer money to the specified address (public key). This can be done using a QR code or by entering the address manually. To send a transaction, you need to import the private key or seed phrase into the software wallet. Depending on the selected wallet, the details may differ, but the general principle is the same – there must be a button that allows you to import the private key from an existing wallet. If you are using a mobile application, then it is most convenient to scan the QR code. It is best to download a new application for this purpose, because if you carry out the procedure on a wallet that already has funds, then the current private key can be redefined and the money is lost.
Why is a paper wallet safe?
As long as the keys do not interact with the Internet, they are not afraid of hacker attacks, viruses or spyware.
What are the problems with this method?
Cases of damage or banal theft of paper wallets with improper storage are very common. There are also certain technical risks.
How to create a paper cryptocurrency wallet?
For this purpose, special software is used. Definitely the most popular of them is BitAddress, it is open source, which is very important – so anyone can check how the program works and make sure it is honest.
How to ensure the safety of funds?
In the case where reliability is of utmost importance, you will have to spend a little more time creating a wallet. To do this, it is recommended to use a new computer, create a paper wallet offline, do not use shared printers, and carry out all manipulations under a Linux-based operating system. And laminate the finished printout and store it in a safe.