When it comes to cryptocurrency, one of the most popular and talked about topics is paper wallets.
They are not an investment vehicle like a stock or bond- they’re just as simple as printing out your private and public keys on paper.
That is why they are regarded as one of the best ways to store your Bitcoins offline. You can find other kinds of cryptocurrency wallets here.
Ok, but what exactly is a paper wallet? And how do you use it?
Read this post to find out!
So what is a Paper Wallet?
A paper wallet is a document containing all of the data necessary to generate private keys. It usually contains a list of paper wallet addresses and their corresponding public keys, allowing anyone with access to them to derive new (and spendable) Bitcoin address pairs as well as clairvoyant-type information about how many Bitcoins are stored at each address.
When generating keys using a paper wallet crypto, users are advised to switch off the internet and make sure no one on the network is sniffing their connection. Also, they should wipe their history once the keys have been generated to prevent any malware on the computer from recording their movements.
What’s so Special About Paper Wallets?
The most important thing to know about paper wallets is that you don’t need any kind of internet connection for them to work. That’s why they are called a cold wallet (read more about cold wallets here). This means your Bitcoins are always accessible and can never be frozen, hacked or deleted by a third party.
Paper wallets also allow users the freedom to create backups in case they lose their original wallet- simply print out another copy! Also, paper wallets are durable as long as they are properly stored.
Should You Use a Paper Wallet?
Paper wallets are a great option for those who want to store their Bitcoins offline, and they’re easy to make. They can’t be hacked or erased from the internet if you lose them- so as long as you keep your key safe, it’ll never fail.
Paper crypto wallet comes with a wide range of benefits, including:
- Security: Paper wallets can’t be hacked or deleted from the internet if you lose them- so as long as you keep your key safe, it’ll never fail. Since they don’t rely on any sort of network or device when generating private keys, they can’t be hacked or deleted off the web like some forms of cryptocurrency storage.
- Portability: It’s easy to store and carry a paper wallet in your pocket. This is one of the things that make paper wallets so popular- they’re easy to carry around. Therefore, they’re a great alternative for those who love trading their crypto when on the go.
- Accessibility: One of the best features about paper crypto wallet is how accessible it is. There’s no need for an internet connection, which means your Bitcoins are always available and can never be frozen by a third party.
- Consistency: Paper wallets are durable as long as they’re properly stored (and even if you lose your original key, there’s still nothing stopping you from printing out another copy).
- Privacy: If they’re properly kept offline, no one will have access to any of the information on a paper wallet but its owner. This allows users to remain anonymous when conducting transactions with Bitcoin Cash (BCH) and other cryptocurrencies.
- Cost Effective Storage: Paper crypto wallets are inexpensive ways for people who just want an emergency stash of cash without having too many precious metals lying around their home that could tempt burglars looking for quick items worth taking!
How Do I Use My Paper Wallet?
To use a paper wallet, first generate some Bitcoin addresses with as much money on each one as possible.
Make sure these funds are stored outside of your exchange account so it cannot be withdrawn from there if compromised. Print out copies of all those private keys, destroying any digital versions after doing so.
Store the copies of these keys in a safe place where they cannot be found- and then you’re ready to spend your money!
How to Spend Coins on a Paper Wallet
Spending coins of a cryptocurrency paper wallet depends on the exchange platform you are using. However, below are the general steps you should follow:
- First, find the deposit address on your exchange and send coins to it from the wallet in which you have those funds stored.
- Next, create a withdrawal request on the exchange. Be sure to fill out all of the required information.
- After you’ve confirmed that your withdrawal is successfully sent, the coins will show up in your exchange account.
- Finally, you can transfer those funds to safe cryptocurrency wallets such as Tezro where they can be used for other purposes.
Dangers of Using Paper Wallets to Store Crypto
Everything good comes with a fair share of drawbacks, and paper crypto wallet is no different. Some of them include:
- User Error: If a user makes an error when generating keys, they may not be able to access their money.
- Loss: If a user loses the paper wallet and can’t remember where it’s located, all of the funds are lost.
- Wear and Tear: Paper wallets will wear down from being touched so much over time- which is why many people store them away safely instead of using them for everyday transactions.
- Security Risk When Lost: Should the paper wallet be lost, malicious people may be able to find it and use the information on it for themselves.
- Hacking: Should a computer containing paper wallets be hacked, your funds are vulnerable. It is prudent to clear your history once you generate and print out the keys, so that you can leave no trace for hackers to find.
- Coercion: If a user is coerced into giving up their private keys, they could be subjected to extortion.
- Malicious Attacks: Malicious attacks on the wallet will make it susceptible to hacking and theft, which could result in all of the funds being stolen without a trace. This is why you should always store your paper wallets somewhere safe where they’re not easily accessible- such as in a fireproof safe or lockbox.
- Fragility: At the end of the day, paper wallets are just…well, pieces of paper. This means that they’re easy to damage, and if damaged, the funds on that wallet are gone.
- Not immune to disasters: If you don’t disaster-proof your paper wallet, then it may not be able to withstand natural and man-made disasters. This means that in case of a fire or flood for instance, you could lose your keys and your assets.
In order to properly store any form of cryptocurrency in an offline setting like this, you need to take some steps when generating your public address- otherwise there’s always a chance that someone could find out about them!
One way is by using a password or passphrase which would make hacking much more difficult. Also, make sure to store your keys in a safe location.
What Are The Best Practice Tips for Using Paper Wallets?
Below are some practices that can make your crypto paper wallet more secure:
- Keep the private key discreet: This is one of the most important things you can do. If someone else finds out about it, they’ll be able to access your funds and take them for themselves without a problem!
- Keep copies safe: You should keep at least two copies of all of your private keys- or even three if possible- just so no matter what happens, you’re certain everything is backed up safely.
- Laminate it: If you’re worried that the paper wallet might get wet or become worn-out over time, laminating it is a great way to protect against this. When you laminate it, you’re also protecting it from wear and tear.
- Store in a fire-proof safe: This is an especially good idea if you have large amounts of cryptocurrency on your paper wallet! You should never keep anything so important unprotected anywhere near the potential for fires. Find a fireproof safe and store it there.
- Disaster-proof it: Apart from fires, it’s also important to make sure that your paper wallet is disaster-proof. This means storing it in a location which would not be affected by natural disasters. Invest in devices such as Cryptosteel which makes sure your wallet are safe from all forms of disaster.
- Dispose of the paper wallet: Once you’ve finished with a cryptocurrency paper wallet and spent all of your funds on it, dispose it responsibly by shredding or burning it so that no one can find your private keys and use them to take your funds and use them for malicious activities.
- Put into lockbox: If you have any plans on traveling with copies of the wallets, put them into a lockbox. This will deter thieves from stealing them and taking your wallets.
Paper wallets have their advantages- but they also have their drawbacks. They’re a popular choice for storing cryptocurrencies because of how safe and accessible they are, but there’s no denying that the risks involved with them are high as well.
However, as long as you follow the best practices outlined in this article, then you’ll be able to enjoy the benefits of paper wallets while minimizing their risks.
A safer way to store your crypto, is to use a digital app instead. If you download Tezro app you can store your crypto, trade it, buy assets with it and exchange encrypted text messages with your friends! Try it now!