What Is a Paper Wallet?

What are Paper Wallets?

Paper wallets are nothing but physical documents that store your public and private keys printed out. Some paper wallets even have a scannable barcode created by apps.

When you print your keys on paper, they are removed from the cryptocurrency network, but the tokens are available. However, they are not accessible without your keys.

Paper wallets are one authentic method of storing private keys offline. They were more common when cryptocurrencies were in their initial stages. However, many crypto users prefer paper wallets even now as they are offline and free from online hacking attacks.

With an increasing threat of online attacks and cyber threats, many crypto users prefer paper wallets. Since they are completely offline, they are more secure than their digital counterparts.

On the other hand, there is always a risk of losing or damaging a paper wallet. Hence, users should be careful.

How does Paper Wallets Work?

A paper wallet is nothing but a piece of paper that has your private keys, seed phrases, and other information printed on it. Paper wallet applications can create private keys or barcodes. The wallet app can scan the paper wallet to transfer the keys to the software wallet.

The logic is to use these apps even when your device is offline. Hence, it is highly advisable to use these applications on a device with antivirus and malware detection software. If not, you can run a free malware check on your computer before using the software to print your private keys or a QR code.

When you print your private keys on paper, aka paper wallet, you can remove them from your digital wallet. Thus, it makes it impossible for any hackers to steal your keys online unless they take your physical document where the keys are stored.

On the flip side, if you lose your paper wallet, you will also lose access to your cryptocurrencies. Thus, creating a seed phrase to access your cryptocurrencies is highly recommended even if you lose your crypto wallet.

Though paper wallets were technically used during the initial stages of cryptocurrency, they are still used today as the keys are stored offline and are free from cyber threats. Hence, users should know about paper wallets as they may need to use them under certain circumstances.

How to Create Paper Wallets?

Paper wallets can be created in many ways. Let’s discuss the most secure way to create a paper wallet.

1. Use a Reliable Wallet Generator

You can use a reliable open-source paper wallet generator to create a dedicated paper wallet. Download the wallet generator on your local device. Make sure the entire process is completed offline. Hence, no one can steal your keys online.

2. Generate the Wallet

Run the wallet generator on your device in offline mode. The software will generate a pair of public and private keys. These keys are often represented as QR codes for quick scanning and ease of use.

3. Print or Write Down the Wallet

Once the keys are generated, users can print the wallet on paper. Ensure that the printer is not connected to the internet. Otherwise, you can even write down the keys provided you double-check every character. Additionally, make sure that the printer doesn’t have any copy of the document.

4. Secure the Paper Wallet

Once you get the keys printed on the paper, store the paper wallet in a secure place. It is highly recommended to secure the paper wallet in a safe, sealed envelope, locker, etc, to prevent unauthorized access to your private keys.

5. Deposit Crypto

Use the public key and deposit the cryptocurrency in your paper wallet. Otherwise, you can share the public key with others and ask them to transfer funds to your paper wallet. However, one should never share the private keys with anyone.

6. Crypto Transactions

To transfer the cryptocurrency, you should import it into a digital wallet that supports paper wallets. Crypto wallets can import the private key by scanning the QR code or manually entering the string.

7. Destroy the Paper Wallet

Once you transfer crypto funds to a more secure method, it is better to destroy the paper wallet. Though private keys are not reusable, keeping the paper wallet after funds can lead to confusion.

How to Secure Paper Wallets?

Paper wallets have always been one of the authentic ways to store cryptocurrencies for years. On the other hand, though paper wallets are offline and are not susceptible to online hacks, they are often prone to environmental factors. For example, damage over time, misplacement, etc.

Printing it out clearly and storing it securely can prevent most of the damage. Here are a few practical ways to secure your paper wallet.

1. Secure Your Device

Paper wallet-generating applications can be designed by hackers to monitor cryptocurrency usage. These hackers can check your browsing history and caches to find out your private key details. Hence securing your device is the key.

How to secure your device? Let’s discuss.

~ Use a reputed, reviewed, and audited paper wallet generator app.
~ Use antivirus software to secure your device from viruses and malware.
~ Ensure your device is not connected to wireless or Bluetooth to prevent cyberattacks.
~ Change your device settings to aeroplane mode to disable all signals temporarily before generating your paper wallet.
~ Ensure your printer is not connected to wireless internet and only print from a wired connection.

2. Secure Your Printer

~ Make sure you use a reliable printer to avoid paper jams, inkspots, and poor alignments when you’re generating your paper wallet.
~ Ensure your printer is in smooth working condition to avoid ink bleeds or fades.
~ Ensure you empty your recycle bins, temporary files, and caches to remove any backups after creating your paper wallet.

3. Safe Storage

Once the paper wallet is generated, store it in a secure place that is fireproof and waterproof. It is highly recommended to use a safe or locker to store your paper wallet.

Pros and Cons of Paper Wallets

Pros

1. Better Security

Since paper wallets are offline, they are not prone to online hacks like malware, phishing, or hacking.

2. Inexpensive

Creating a paper wallet is inexpensive compared to other types of wallets. You get it printed on paper, and you’re good to go.

3. No Intermediaries

There is no involvement of intermediaries in paper wallet generation. Hence, users will have full control over their crypto assets.

4. Privacy

As paper wallets are offline, they don’t require you to store any personal information online, preventing the possibility of personal data leakage.

5. Long Term Storage

Paper wallets are ideal for the long-term storage of cryptocurrencies without requiring users to monitor software upgrades constantly.

Cons

1. Physical Damage

Paper wallets are more prone to physical damage like fire, water, and common wear and tear. Hence, if the wallet is lost or damaged, you will lose access to your crypto assets.

2. Not Practical

Transferring or spending cryptocurrency can be cumbersome with a paper wallet. Users have to import the private keys into a digital wallet every time before the transaction, making it challenging to use regularly.

3. Human Error

The process of generating a paper wallet is manual, involving multiple steps like writing, printing, and storing them. Any human errors like misplacing or failing to record the keys correctly can lead to permanent loss of funds.