How to create a Bitcoin paper wallet
A bitcoin paper wallet is a cryptocurrency address that helps individuals to store bitcoin offline.
Fiat currency has a physical representation which is the dollar or currency note. On the other hand, Bitcoin has no physical representation; thus, it is stored using an encrypted ledger known as Blockchain.
The blockchain system is responsible for certifying bitcoin's transactions. A paper wallet is also based on the blockchain system.
A wallet address is like a bank account number. The wallet address is a unique key made up of alphanumeric characters used for sending and receiving bitcoin or any other cryptocurrency.
There are two forms of representing a cryptocurrency wallet: a long string of case-sensitive alphanumeric characters, e.g.
1mgi5nhsxu3ljncdar69cebpFFFFfffssmwcm or a QR code, as shown in the image below.
A typical example of a wallet address.
There are three wallet types or systems for storing, sending and receiving cryptocurrency, namely:
- Paper wallet
- Hardware wallet, and
- Software wallet.
A paper wallet is an offline or cold storage method for storing cryptocurrency. It is one of the safest types of wallets for storing crypto for the long term.
A paper wallet is primarily printed on a piece of paper that contains keys and QR codes.
Some paper wallets are completely offline and cannot be hacked. A wallet public key is used to receive cryptocurrency and can be shared around, while the private key is used to access the crypto assets is printed on paper.
Advantages of Paper Wallet
Paper Wallet has several pros or advantages. Some of the advantages of a Bitcoin Paper Wallet are listed below:
- Paper wallet is offline thus, it is inaccessible to hackers
- Because a paper wallet is offline, it cannot be affected by malwares
- Paper wallet is considered the safest means of storing bitcoin.
An Example of Bitcoin Paper wallet
Disadvantages of Paper Wallet
The paper wallet also has many cons or disadvantages associated with it; some of the disadvantages of a paper wallet are listed below:
- It can be damaged by water, fire
- You may forget where you kept
- If someone set their eyes on it and take a snapshot of it, the person can steal your funds etc.
- Thus it requires you need to have multiple and safe backups,
- Many people believe that risks associated with losing or damaging the paper wallet may outweigh the potential security benefits.
- Though it is an offline wallet, hackers sometimes installed malware to printers connected to a larger network and sometimes steal the keys during the generation process.
How to create a Paper Wallet
Below are procedures to create a paper wallet to store cryptocurrency:
- Go to the BitAddress website
- Generate a private key by moving your mouse around the screen till the counter reaches 100%
- Click print wallet.
- Choose how many copies you would like to print out,
- Encrypt the wallet with a BIP38 password (optional)
- Print the paper wallet.
Generate a private key by moving your mouse around the screen till the counter reaches 100%.
Click “print” print out your Bitcoin wallet address.
The major demerit of a paper wallet is user error. If a printer uses low-quality ink, it may fade or clear with time, making the paper wallet useless. There are also cases of misreading the keys, which will lead to the loss of the crypto assets.
In summary, a Paper wallet has its own benefit, but you are advised to weigh and balance the risk against the acclaimed benefits.