What is a paper wallet and how do you create one?
With a paper wallet, you can store your crypto on paper. In this article, I’ll explain what a paper wallet is and how to use one.
Summary of the paper wallet
- A paper wallet is a sheet of paper that can be used to store cryptocurrency
- You print out both a private and public key
- You need to store the private key safely in a safe or secure location
- The public key can be used to receive crypto
- You can easily create a paper wallet online
Hot versus cold storage
When it comes to using a wallet, it is possible to store your cryptocurrencies hot or cold:
- Hot storage: the storage is connected to the internet.
- Cold storage: the storage is not connected to the internet.
With a cold wallet, it is more difficult for hackers to gain access.
What is a paper wallet?
A cold wallet is, if you take the right precautions, one of the safest ways to store your crypto. A paper wallet is a completely cold wallet.
To use a paper wallet, you print the public and private keys on a piece of paper, which you then store in a safe and secure location.
- Public key: This key can be shared with others. The key can be used to send cryptocurrency.
- Private key: This key must be kept hidden, otherwise others can steal your cryptocurrency.
The keys are printed in the form of QR codes that you can scan for all your transactions in the future.
How to create a paper wallet?
Paper wallets are created using a special program that randomly generates a public and private key. The keys are always unique and the program that generates them is open source.
This also means that you can be sure that no one else has access to your keys. Moreover, most websites generate the keys for the paper wallet completely offline.
The easiest way to create a paper wallet is to use a website like https://walletgenerator.net/.
After creating a wallet, you can check the balance at any time by going to https://www.blockchain.com/explorer.
Pay attention to security
An important tip is to go offline and create your paper wallet without internet. This ensures that your private key cannot be sent to a malicious party.
Also, check carefully for any malware on your computer when creating the paper wallet. If it is present, someone can gain access to your data.
It is important to never make a digital backup of your private key. Never store your keys via a hard drive or digital scan.
What are the benefits of a paper wallet?
No faulty hardware or software
The reason many investors choose a paper wallet is that they don’t have to worry about faulty hardware or software. The only thing you need to worry about is a piece of paper. This makes it a convenient option for people who are not familiar with hardware wallet software.
Another advantage is that they are very safe to use. An online wallet is easier to hack. A software wallet on your computer is also more accessible than a piece of paper.
What are the disadvantages of a paper wallet?
Some knowledge required
A wallet on a crypto exchange is easy to use. When you want to use a paper wallet, you need sufficient knowledge to do so.
You can lose the paper wallet
Another disadvantage is that if you lose the paper wallet, you lose access to your Bitcoin. If you choose a paper wallet, you need to keep the piece of paper very safe. You can put it in a fireproof safe if you want to be sure it stays intact.
Do you really need a paper wallet?
Many people wonder if it is necessary to use a paper wallet for storing digital currency. The answer to this question will largely depend on your personal circumstances.
If you plan to trade daily, a paper wallet is very cumbersome. However, if you invest in the long term, a paper wallet can be an attractive option.