Switching to Bitcoin is a popular choice for tech-savvy shoppers and entrepreneurs. However, when you begin to accumulate massive funds, the risk of theft from malware can increase. Paper wallets offer a secure alternative to protect your investment. This article provides you with a step-by-step guide to create your own Bitcoin paper wallet to ensure that you are safe from cyber-attacks.
What Are Paper Wallets?
A paper wallet is another form of Bitcoin storage. When you receive or buy bitcoins, you store your funds in a bitcoin wallet. Most people use an app or web-based wallet, such as Coinbase or Blockchain.info. A paper wallet is the physical version of this system. It is not connected to the internet and, if generated correctly, is not prone to cyber-attacks.
Benefits of Using a Paper Wallet
Paper wallets are the solution to the issue that has plagued bitcoin since its conception: security. Bitcoins are traditionally stored on software or web-based wallets. Some web-based wallets do offer limited insurance against hackers and malware. However, they are still prone to attacks.
Offline software wallets are a more secure alternative but can pose certain issues with viruses or file corruption. A paper wallet is a form of bitcoin cold storage. You can print the keys to your bitcoin funds on a specific paper, and store it away from the eyes of hackers.
Paper wallets are not perfect. They can be susceptible to physical degradation, such as water damage, deterioration, or fire damage. Your wallet can also be stolen by traditional thieves.
Who Uses Paper Wallets?
Any user that wants to bolster their security should use a paper bitcoin wallet. This form of security is particularly popular for users that own large amounts of bitcoins.
You can also use a paper wallet for gifts. For friends and family new to bitcoin, paper wallets may be easier to grasp than mobile exchanges. This option saves them the hassle of transferring their money from a bank to a new bitcoin address.
6 Steps to Create a Paper Wallet
Step 1: Create a New Address
Like a web-based wallet, paper wallets must have unique addresses. You can create your own address with a pair of die and a software-based entropy program, or you can use efficient online tools like BitAddress. BitAddress generates as many wallet addresses as you need, which can be helpful if you prefer to disperse your funds into separate wallets.
For the utmost security, it is recommended that you download your address generator onto a USB drive and install the program on an offline computer. Even though the generator’s addresses are completely randomized, the site may be vulnerable to hacking. Creating your address offline ensures an extra level of security.
Step 2: Encrypt Your Address (Optional)
If you’re familiar with encryption, you can add a BIP-38 passcode to your address. This is an extra security step that protects your paper wallet in the event that it is stolen or someone tampers with it. Just make sure to write your passcode down or make it something easily memorable.
If you do choose to add this security feature, remember that this will also add another step in transferring your funds. You will need to validate the address with a Wallet Import Format (WIF) before you can sweep the funds.
Step 3: Create Your Wallet with a Paper Wallet Bitcoin Site
Once you’ve generated your unique wallet address, you can create a paper wallet with either your favorite web-based program, such as Coinbase or Blockchain.info, or a bitcoin paper wallet generator, like bitcoinpaperwallet.com.
Bitcoinpaperwallet.com is an excellent resource if you own a small business or intend to give the funds as a gift. You can use the standardized design provided from by the Bitcoin Foundation, or create your own. You can also purchase helpful accessories for your paper wallet, such as hologram stickers to prevent tampering. Bitcoinpaperwallet.com also provides offline software to generate your wallet.
Step 4: Print Your Paper Wallet
Make sure that your printer is not connected to any internet network before printing. To create the most durable paper wallet, use a laser jet printer. This ensures that the QR code and literature will not smear if it comes into contact with precipitation and will not fade with sunlight.
If you don’t have a laser printer, you can still print with an inkjet. Just make sure that you protect your wallet against damage by laminating it or spraying it with an appropriate sealant.
Step 5: Store Your Wallet
Like any valuable possession, a paper wallet must be stored in a secure location. Many users store their wallets in a vault or safe. Make sure that the location is waterproof and fireproof. It’s also a good idea to print off multiple copies, so you always have a backup copy.
Step 6: Transfer Funds
Before transferring bitcoins to your new wallet, test the printed QR code with a QR scanner. Then, scan the public address to your web-based Bitcoin app to transfer funds.
When you’re ready to remove bitcoins from your wallet, you will need to import or sweep the private address. Sweeping is similar to importing, except all of the funds are removed from the previous address, and any leftover funds are added to an entirely new account. This eliminates the risk of your funds being accessed later. From here, you can recreate your paper wallet if necessary.
While paper wallets are not hack-proof, they do provide an additional layer of security that can set your mind at ease. It’s important to create your paper wallet offline and store it in a secure place. These extra precautions will ensure that your bitcoins will remain safe from unwanted attention. Do you have a favorite paper wallet generator? Share your experiences and favorite platforms below.