Are you scared of losing your investments done on cryptocurrencies? Do you skip a beat every time you read about the exchange being hacked or money being stolen from crypto wallets? As the crypto industry is growing, similarly the cyber hacking industry is also blooming with sophisticated techniques to fish for money from crypto investors. However, you can protect your funds by judiciously utilizing some of the products available in crypto space. Paper wallet is one of the crypto products, which can assure the utmost security of the keys of your cryptocurrencies. In this guide to paper wallet, we’ll learn more about this hardware crypto wallet along with the benefits associated with it. We will also try to understand the basic steps to set up the paper wallet.
What is Paper Wallet In Cryptocurrency?
If crypto is a digital currency backed by the complex mathematical problem, then why do we need a wallet in the first place? What do crypto wallets actually store? A cryptocurrency wallet can be hardware USB like device, physical medium, or any software, which actually stores the public key (like an email address-known to all) and private keys (like a password-known to you only). For storing the keys, especially private keys which is just a long string of random characters (along with recovery phrases), crypto space offers hot/online and cold/offline wallets. Generally, cold storage is preferred to secure your keys which can be USB like devices or simply a paper.
A paper wallet is a cold or offline crypto wallet that stores the private keys securely. What is a paper wallet? Simply, it is a piece of paper with a private key written on it which dilutes the chances of getting your wallet hacked by cyber attacks. With a paper wallet, you can completely control your keys keeping away from virus and malware attacks. You just need to store your paper wallet in a vault with a key hidden in your most secure place. Just kidding! Keep the paper as safe as you can.
How To Create A Paper Wallet? | Guide To Paper Wallet
Crypto paper wallets are the offline cold storage which is generally considered as the most secure method and better than vulnerable online wallets to store private keys of your digital assets. Unlike the other wallets, you do not need to configure but to create your own paper wallet. Pheew!! So much work? Relax! You just need to take out a print out of the QR codes associated with your wallet and keep it safe. Whenever you wish to use your coins, you just need to scan these codes.
Bitcoin paper wallet generators are available online to create your paper wallets. Basically, generators are open source software (sometimes hardware devices too!) that are exclusively designed for generation of highly secure Crypto paper wallets. Most popular generators are BitAddress, WalletGenerator, and Mycelium Entropy. You need to follow simple steps to know about paper wallet creation:
- Google the name of any generator mentioned above. Let’s suppose you clicked on BitAddress.
- Now just sit back, and move your mouse randomly (play with your mouse!) on-screen or enter a random text and keep an eye on the screen.
- After a few seconds of random movement, two QR codes will be displayed on your screen: public and private along with the random texts.
- You just need to print that paper (Don’t save it on your system!) and keep it at the most secure place.
- For extra security, you can add a passphrase by filling the checkbox “BIP38” for the purpose of encryption of the paper wallet.
- You are all set to secure your coins in a crypto paper wallet that too within a minute (if your internet connection is intact!)
Points of Caution
- Make sure your system is not having any malware or virus by running your antivirus software.
- While you are generating and printing your private keys, assure that no one around you is keeping an eye on your keys.
- You can switch to the process of the “advance” or offline version to generate keys where keys will be generated offline without any risk of cyberattacks.
- Always clear the cache or history of the web browser after generating your keys.
- Never ever keep your keys in your system either in the download section or in any folder.
- High-quality paper with a damage proof storage place must be chosen to keep your keys secure. You can also laminate the paper for protection from water, heat, and other damages.
- You can store the keys by fragmenting the piece (two or three) of paper and keeping at different places for more security.
How To Trade On Paper Wallet?
One question might be banging in your head while reading this guide to paper wallet i.e. how to trade on a paper wallet or with a piece of paper? Don’t worry and keep reading to find out the procedure. Now, let’s consider you want to sell some coins on any reputed crypto exchange. For that, you will need to install any renowned Bitcoin wallet on your mobile and have to use different devices to find the address of the online wallet of the exchange you had chosen to sell your coins. After logging into your exchange account and finding the QR code on the screen, just open up your paper wallet. Using the app on your mobile, just scan the QR code of your paper wallet (Either you have to select cold storage or import wallet on your mobile app to transfer coins from the paper wallet). Now you just need to write the amount you wanted to transfer to your mobile wallet and you are good to go to sell your coins. (Similarly, you can receive the coins too.!)
Thus, it can be concluded that crypto wallet is easily available, with the hassle-free installation process and highly secured method for storage of the coins. Although paper cold storage is considered as the safest option to protect your coins, you need to be cautious and make sure that no one can find your paper wallet. So, if you are interested in trading or investing in digital assets, you must choose your wallet carefully and as per this guide to paper wallet, choosing the paper wallet can turn out to be a good option!