What Are Paper Wallets?
But before we discuss why paper wallets could play a crucial part in keeping people’s crypto investment safe, we first need to understand what, exactly, a paper wallet is. A paper wallet is a way of storing your cryptocurrencies offline, by printing out your public and private keys on a piece of paper. They are among the most secure ways of storing cryptocurrencies offline, especially if you want to keep them away from potential hackers and malware on your computer.
How Paper Wallets Enhance Security
But paper wallets are an extra layer of safety because they’re completely offline – so-called ‘cold storage’. Any machine connected to the network is vulnerable to hackers or phishers, or even simple malware. With your private keys written on paper, your funds can’t be accessed through digital means.
Creating a Paper Wallet
To make a paper wallet, you would use a ‘cold generation’ process: generate the new wallet on a trusted device (that is, one that hasn’t been connected to the net, is clean, and not tainted with malware), and then use it to generate the paper wallet’s private key and public key. You can then print out these keys for safekeeping. There are many websites that do this, and you should make sure that the site does not retain copies of your keys after the generation process is complete.
Storing and Managing Paper Wallets
Once it has been printed, the paper wallet must also be stored safely to prevent physical damage or loss: it should be kept in a waterproof and fireproof container or safe, for instance. Some users additionally laminate their own paper wallets to prevent the paper from being damaged or worn out physically. Once the paper wallet has been stored away, great care must be taken not to lose it – after all, if the paper wallet is lost, there is no way to recover its cryptocurrency assets.
Transferring Cryptocurrency to Paper Wallets
To deposit money into a paper wallet, you might send cryptocurrency from your digital wallet to the public address printed on your paper wallet. Completing this transaction over the blockchain will accomplish the transfer of your funds to the paper wallet (data on the blockchain can’t be altered or deleted). Money in that paper wallet can’t be stolen or accessed again once it’s sent there, unless the holder chooses to share the private keys printed on the paper wallet.
Risks and Considerations
Paper wallets are about as secure as you can get, but are not without potential problems: if the site or application is compromised when you generate the paper wallet, your keys could be intercepted when you create them; and the physical aspects – such as theft, fires or floods – could destroy your holdings entirely. As such it makes sense to protect and back up your paper wallet.
Conclusion
Paper wallets represent one of digital cash’s most important security features against all the digital risks. With some knowledge of how to make, use, and store them, investors can add an additional layer of security to their holdings. Paper wallets may be a bit tricky to handle, but they offer the most secure form of cold storage money can buy on the web.
