To store crypto assets, users employ a tool called a wallet. There are several types of crypto wallets. Today, choosing the right one can be somewhat difficult, especially for a beginner. One can opt for an online wallet on an exchange platform (not recommended, by the way) or a non-custodial wallet , for example. These are the two types of wallets we use most often.
However, since both types of wallets are connected to the internet, they are vulnerable to hacking and cyberattacks. To protect their cryptocurrencies and shield them from cyberattacks, many suggest using a hardware wallet like Ledger or Safepa . These are known for being very secure. However, they are relatively expensive hardware wallets… Another alternative exists: paper wallets.
In this article we will explain what wallet paper is. Why do some people prefer paper wallets? What are the advantages and what are the disadvantages? Does it have a strong potential for securing cryptocurrencies and how to create a paper wallet?
A paper wallet: what is it?
A paper wallet is a piece of paper on which the user's private and public keys are printed. Some paper wallets may also have a scannable barcode generated by an application. It's a way to store and access your cryptocurrency without an internet connection. In practice, when a user prints their keys, they are removed from the cryptocurrency network while still existing and can only be accessed with the printed keys.
Indeed, a paper wallet is a printed sheet of paper containing keys and QR codes used to facilitate cryptocurrency transactions . Once the code is printed, the wallet and all the codes are removed from the internet. Because they are not connected to the internet, paper wallets are not vulnerable to cyberattacks.
In other words, you can only lose your cryptocurrencies if a third party gets hold of the paper on which your keys are printed and you damage or lose it. Therefore, paper wallets have always been considered more secure than other forms of cryptocurrency storage.
Why are paper wallets no longer “popular”?
Note: The arrival on the market of companies manufacturing hardware wallets (like Ledger ) is relatively recent. Bitcoin users previously mostly used paper wallets…
Wallet papers were generally used before cryptocurrencies became popular. Bitcoiners used them before hardware wallets appeared. Since the high adoption of crypto assets, storage technology has improved. Also, paper wallets are generally offered free of charge. The sites survive with a system of donations. So there is no marketing, no companies behind it, no influencers who will promote paper wallets…
But paper wallets still remain a valid (and free) way to store your keys to secure your crypto assets. As you may find yourself obliged to use a paper wallet, we consider it essential to understand what a paper wallet is and how it works.
The steps to follow to create a wallet paper
Wallet papers are generally created by paper wallet generator applications. These are software programs that are designed primarily for this purpose. Among these software, the best known are:
- BitAddress
- WalletGeneretor (This is the one we use personally)
- Bitcoinpaperwallet.com
- Mycellium Entropy
Very simple. Here are some steps to follow to create a paper wallet.
Step One: Strengthen Your Computer Security
This is not a general hardware cleanup. It's simply about strengthening computer security through a full scan using up-to-date antivirus software. The use of more sophisticated tools like Tails (a security-focused boot disk) or Glacier (a multi-computer process) is recommended.
Also remember to connect your printer to the internet.
Second step: Downloading the paper wallet
Never generate a wallet online. It is recommended to do so offline on the Bitaddress.org website. Several security precautions will be required after downloading the file, including verifying the author's PGP signature .
Step Three: Disconnect
The disconnection step is the key to successfully generating a paper wallet for Bitcoin (BTC) . Besides disconnecting your computer and printer, you must also choose between Google Chrome or Firefox and disable any other web browsers.
Step Four: Portfolio Generation
Once disconnected from the internet, you can generate one or more wallet papers. To do this, simply open the Bitaddress.org.html file located in the list of extracted zip files in your secure browser. By moving your mouse or typing random characters in the designated area, you will obtain a Bitcoin address . It's important to note that achieving 100% randomness will automatically generate a single wallet.
Note: Be sure to delete all downloaded files on your computer before restoring your internet connection.
Step Five: Portfolio Feeding
Funding a Bitcoin paper wallet depends on the user's goals. Generally, people fill their paper wallets for long-term savings or to give as gifts . Some also deposit small amounts of satoshis to test the effectiveness of their public address. In fact, we ourselves advise you to start with very small sums.
Sixth step: Securing the paper wallet
Although at this stage you have the physical version of your wallet in your hands, this does not mean that it is secure and safe. You must put your wallet paper in a safe place. Place a tamper-evident seal sticker there, if necessary. Also remember to fold your paper wallet in such a way that no one doubts its contents. Store it in a place protected from humidity, for example.
Some people prefer to store them in a bank safe deposit box. However, for those with significant capital, other solutions exist, such as Casa.keys.
How secure is a paper wallet?
Wallet papers have long been considered one of the safest ways to store cryptocurrencies. However, they have fallen out of favor with many cryptoasset fans because they are sensitive to environmental factors. Indeed, it is easy for paper wallets to degrade over time, be misplaced or otherwise damaged.
However, cryptocurrencies can still be useful if they are printed clearly, stored securely and protected from damage. And in these conditions, they are among the safest because they are protected from cybercrime, a recurring practice in the ecosystem.
What are the disadvantages of paper wallet?
Very clearly, the biggest disadvantage remains the fact that you can lose the paper wallet relatively easily. Worse still, it's still paper, so it's prone to flooding and fire accidents...After a certain time, the ink can also fade.
Thus, even though overall it remains a secure bitcoin wallet , the risks of degradation do indeed exist.
Is the paper wallet a cold wallet?
Obviously, a paper wallet is a form of cold storage. Indeed, a cold wallet, or its full name, a " cold storage wallet ," is a secure storage space not connected to the internet. It's a wallet that allows you to keep your cryptocurrencies safe and secure, protected from any loss due to computer glitches or hacking. Unlike a " hot wallet ," which is directly connected to the internet, a cold wallet offers maximum security against the risk of a cyberattack.
Indeed, with offline storage, the attack surface is significantly reduced for hackers. Thanks to offline storage, cold wallets (offline) today represent the safest way to store your cryptocurrencies.
Final word on the Paper Wallet
In conclusion, after embarking on any form of crypto investment, it's essential to consider the security of your crypto assets. To store your cryptocurrencies, several secure mobile applications (electronic wallets) exist, such as TrustWallet , as well as paper wallets, which are subdivided into two types: hot wallets (connected to the internet) and cold wallets (offline), such as hardware wallets.
Each of the two types has different characteristics (such as being custodial or non-custodial ), with advantages and disadvantages.
The sole objective of this article is to explain them to you so that you can choose, with full knowledge of the facts, on which type of medium your cryptocurrencies are more secure.
It's up to you to diversify your assets and vary your portfolios and make your security system more complex. Ultimately, this remains perhaps the best way to optimize the protection of your capital.
Other articles that may interest you:
—> Custodial vs. Non-Custodial Crypto Wallets: What Are the Differences?
—> Discover the world's most downloaded wallet: Trust Wallet
—> The 5 best Lightning Network wallets ⚡
—> How do I revoke the contracts in my portfolio?
Note: No financial advice is given in this article or any other article on ZoneBitcoin . This information is entirely your own judgment. Be responsible for your investments and only invest an amount you are prepared to lose.
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Hello ZoneBitcoin. I admit to being a little doubtful about this article. I believe that in 2022 it is more or less accepted that we should avoid using and recommending paper wallets, at least in the sense in which they are described here. In addition to the risks of loss or destruction, there is the risk of not generating it properly (infected machine, use of a corrupted site or app to generate the wallet), printing problem, error in the printed key, use of a machine that keeps the tasks in memory (with the risk that someone will make another copy afterwards) but even more common, the risk of not using the wallet properly. Many people who made a paper wallet thought they would have their key in a safe place forever. They opened a wallet, imported the key into a new wallet to spend part of it, then closed the wallet and put the paper wallet away, thinking of spending the rest later. However, the change was sent to an address generated by the new wallet which potentially was not saved or was subsequently deleted by mistake.
The best if you want to make a paper wallet is to generate a standard seed (BIP 0039) on a hardware wallet (Tezor, Ledger, Coldcard, BitBox2, Specter…) or a little more risky on a relatively secure PC by booting it on a widespread Linux Live key for which we have checked the origin of the ISO and verified the hashes and signatures with an equally reputable wallet (Electrum or Sparrow) the same by controlling the hash and signature of everything we install and use.
Then you have to write the seed on several papers or better engrave it on metal and store at least 2 copies in 2 different places (some apply the 3-2-1 rule, 3 copies on 2 different supports with 1 copy kept securely outside the main place of use.
The next level is to move on to multisign but here we are moving away from the subject.
If you still have paper wallets with Bitcoin, I really advise you to create a new wallet with a properly backed-up seed and to do a complete sweep of the paper wallet on the new wallet, to be sure you can recover your Bitcoin no matter what. when in the future without incurring all the risks linked to the paper wallet and its use.
[…] Internet. Among them, we find hardware wallets. We can also mention paper wallets which are also cold […]