What Is a Paper Wallet?
A paper wallet is a piece of paper with your private and public keys printed out. Some paper wallets might also have a scannable barcode created by an app. It is a way to store and take access to your cryptocurrency offline. When you print your keys, they are removed from the cryptocurrency network, but the tokens remain; however, they are inaccessible without your keys.
Paper wallets were generally used before cryptocurrency became popular. Storage technology has improved since then, but paper wallets remain a valid way to store keys in certain circumstances.
You might encounter a time when you need to store your cryptocurrency on paper; therefore, it’s essential to understand what a paper wallet is, how it works, and the risks if circumstances require you to create one.
Key Takeaways
- A paper wallet is a printed piece of paper containing keys and QR codes used to facilitate your cryptocurrency transactions.
- Because keys are removed from devices with internet connections, paper wallets were considered more secure than other forms of cryptocurrency storage.
- While many people believe that the risks of losing, misreading, or damaging a paper wallet outweigh the potential security benefits, it remains an option for storing your keys.
How Paper Wallets Work
A cryptocurrency wallet allows you to store your private keys. A cryptocurrency paper wallet is a piece of paper with your private keys, seed phrases, and other information printed on it. Paper wallet applications can create them (but are not a requirement) and may also create a barcode. To use the barcode, the wallet app on your device will scan (or sweep) the paper wallet, which transfers the keys to the software wallet.
These programs can—and should—be used when your device is disconnected from the internet. Ideally, you’d also use the program on a device with up-to-date antivirus and malware detection software. This won’t always be feasible, but at the very least, you should run a free malware check on your computer before using the software to make a printable version of your keys and a QR code.
Fast Fact
A QR code (quick response) is a barcode your app generates that allows your wallet to quickly scan your paper wallet into your hot wallet if it has a camera and the required software.
When you choose to print your keys, you’re given the choice to remove them from your digital wallet. If you remove them from your wallet, no one can steal your keys through a hack or retrieve your keys unless they physically take the paper on which you have them stored. Removing them from your digital wallet also means that if you lose your paper wallet, you’ll not be able to gain access to those cryptocurrencies again—unless you’ve created a seed phrase using your wallet, which is highly recommended.
Paper wallets were generally used before cryptocurrency became popular. Storage technology has improved since then, but paper wallets remain a valid way to store keys in certain circumstances. There may still be instances where you need to store your cryptocurrency keys on paper.
How to Create and Use a Paper Wallet
As noted above, paper wallets are usually generated using an app. However, there are many ways to create a paper wallet, the most simple of which is to write your keys and seed phrases on paper with a pen.
If you’d rather not write so many letters and numbers (64 digits per key), you could use these steps to create your own paper wallet:
- Choose and install your app
- Make sure you’re disconnected from the internet and other devices
- Create your wallet
- Decide the number of copies you want to print
- Enter a PIN or password to encrypt your wallet if prompted
- Generate your wallet
Don’t forget to delete any history, cookies, clear your browsing cache, and remove the app if necessary.
Once you have the wallet printed, you can safely remove your keys from your wallet device or app. If you want to restore your keys to your wallet device, you can use its scanning option or enter the keys manually to use them.
How to Safeguard Your Paper Wallet
Paper wallets were considered one of the safest ways to store cryptocurrency for several years. However, they have fallen out of favor with many cryptocurrency fans because they are susceptible to environmental factors, can degrade with time, be misplaced, or otherwise be damaged.
They can still be useful if printed out clearly, stored securely, and kept safe from damage. However, you should consider several factors before deciding to use a paper wallet.
Device Security
Paper wallet-creating applications can be programmed by hackers to search and monitor for a specific activity like cryptocurrency use. They can scan browsing history and caches in the system where temporary information is stored or even view your screen while you’re generating your keys.
Here are a few ways you can keep your device secure:
- Use a reputable, reviewed, audited, and popular wallet and paper wallet creator app.
- Ensure that your device is safe from cyber-attacks, malware, and viruses by using security software to scan it.
- Computers, phones, and tablets can all be hacked into or infected by malware, ransomware, viruses, or other forms of cyberattacks, so it’s essential to ensure your device’s wireless and Bluetooth are off because those signals can be accessed.
- Consider placing your smartphone or tablet on airplane mode to disable all signals temporarily before creating your paper wallet.
- Only print from a wired connection, and make sure the printer’s wireless signal or Bluetooth is off.
Important
Make sure you don’t take or keep digital pictures or scans of your wallets because hackers can acquire those pictures.
Printing
Printers are not always reliable, and any problems while you’re printing can lead to the loss of your keys and cryptocurrency. Paper jams, inkspots, or poorly aligned printer heads can all cause serious problems when you’re creating your paper wallet.
It’s possible that the wallet or program you’re using will allow you to print your keys before they are deleted from your device, but you should make sure that is the case before you print to prevent losses caused by a faulty printer.
Certain types of printer ink can bleed over time, and different kinds of paper accept and hold ink differently. If you’re going to print out your wallet, ensure you use a printer that you know works well, paper that will last a long time, and ink that will not fade or bleed.
When you’re finished, make sure you empty any recycle bins, temporary files, and caches and remove any digital backups that might be created. Remember, printers connected to larger networks often store information; hackers may be able to access this storage and find the keys during or after the generation process.
Physical Storage
Once you’ve created your paper wallet, consider how you’re going to store it. You’ll need a secure place, such as a fireproof and waterproof safe, to house your wallet. Depending on the fair market value (FMV) of the cryptocurrency you’re placing in a paper wallet, you might consider safe deposit boxes at your bank or financial institution.
Are Paper Wallets Still Safe?
Paper wallets were once the most secure method for storing cryptocurrency. It is still a valid way to store your tokens if you have no other storage method. However, you should consider it a temporary method until you can access another way to store them.
Are Paper Wallets Cold Wallets?
Yes. A paper wallet is a form of cold storage because it stores keys on something that does not have a connection. However, your keys are only considered to be in cold storage if they are removed from a wallet that can connect to a network or the internet.
Is a Paper Wallet Safer Than a Hardware Wallet?
Many people consider hardware wallets to be more secure, but they are devices with software on them. A hardware wallet also requires a connection to transfer keys unless they are manually transferred, and they can be damaged or lost. Paper wallets can degrade and be lost and rely on manually reentering keys to a connected wallet or scanning them with a third-party app.
The Bottom Line
Cryptocurrencies are types of digital currencies. Because they’re digital, it only makes sense to store them in a digital wallet. Although this is the most common form of storage, you can still hold your cryptocurrency keys in a paper wallet by downloading an app and printing them out or writing them down. Keep in mind that there are risks to doing so. Paper wallets are easily damaged and you may be subject to security risks if you don’t take the necessary storage precautions.
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