The profoundly escalating levels of attention towards cryptocurrency are one of the foremost headlines in tech news and trends. As cryptocurrency adoption slowly finds momentum, crypto wallets are more likely to become a topic of discussion. Just like physical wallets for cash and credit/debit cards, you need crypto wallets for storing your cryptocurrency. However, the interesting fact about crypto wallets is that they don’t store your cryptocurrency. On the contrary, they store the private keys you need to access your crypto holdings. A paper wallet has been considered one of the most basic and secure methods for storing crypto.
So, what are paper wallets, and how do you store your crypto on paper? With the continuously escalating instances of hacking attacks alongside people losing their crypto funds, crypto wallets definitely offer a promising solution for securely purchasing and storing cryptocurrencies. A suitable variant of a crypto wallet could help you with security of your digital assets, and paper wallets are one of them. The following discussion tries to describe “what is a paper wallet” in detail alongside its working and processes to set up paper wallets.
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Understanding Crypto Wallets
In order to understand the concept of paper wallet blockchain, you need to understand crypto wallets. They are basically digital wallets that help you in storing, sending, and receiving cryptocurrencies. Now, you should understand the concept of public and private keys to know the basics of how crypto wallets work.
The public key is like a public wallet address, which anyone can use for sending payments to your wallet. The private key is the secret code for accessing your funds in the wallet. Users should not lose the private keys for the crypto wallet, or they risk losing their funds forever. Basically, the crypto wallet stores your private keys, which help you access your funds or crypto assets on the blockchain.
Depending on the way the crypto wallets store your private keys, you can find two distinct variations of crypto wallets. The two categories of crypto wallets include hot storage wallets and cold storage wallets. Hot storage wallets are the ones that store private keys in an online environment.
On the other hand, cold storage wallets ensure the storage of your private keys in completely offline environments. Cold storage wallets are great choices for long-term crypto holders who do not require access to crypto for long periods of time. The two most common types of cold storage wallets include hardware wallets and paper wallets.
You can use hardware wallets just like a USB device for accessing your crypto and making transactions with it. On the other hand, a paper wallet is basically a printout of your public and private keys on a piece of paper. Let us discover more about paper wallets.
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What Are Paper Wallets?
Whenever you go out to find answers for “What is a paper wallet,” you wouldn’t experience any difficulties in understanding them. Paper wallets are considered one of the best ways for storing any cryptocurrency, and you could set them up easily without any costs. As a result, you can have complete control over the ownership of your crypto assets. Interestingly, the right precautions with a paper wallet could also ensure that your private keys are never known to anyone else. On the other hand, losing the paper could also imply that you would lose all the contents of the paper wallet.
You might be seeking a more practical answer for “What is a paper wallet,” which shows what it looks like. As you all know, paper wallets provide an offline storage method for storing and managing your cryptocurrency. The design of paper wallets basically involves printing the public and private keys to crypto assets on a piece of paper, which you can store and save in a secure location. A paper wallet for Bitcoin would just have QR codes printed on paper. You can scan the QR codes for all transactions associated with the wallet.
The foremost factor responsible for empowering safety in paper wallets is offering complete control to the user. Interestingly, you do not have to take care of any hardware or software application with a paper wallet or worry about hackers, virus infections, and malware. Just protect the piece of paper, and you are good to go!
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Advantages and Risks of Paper Wallets
The next important factor you should look for in a description of paper wallets would refer to their advantages and risks. You could develop a clear understanding of the reasons for using paper wallet in blockchain applications to store your cryptocurrency. Here are the notable advantages of paper wallets.
- Paper wallets stay in your hand and in offline environments. Therefore, you don’t have to worry about any technical failure with paper wallets, like in the case of hardware or software wallets.
- Most important of all, a paper wallet is completely free of cost. You can get the advantages of cold storage with paper wallets without investing a lot of bucks in hardware wallets.
- With offline storage for your crypto assets, paper wallets could prevent many hackers from compromising your crypto. The offline storage of keys is a plausible method for improving the immunity of your crypto to threats.
While a paper wallet for Bitcoin might offer some exclusive advantages, it also comes with certain risks. Some of the notable risks associated with paper wallets include the following.
- One of the formidable setbacks with paper wallets is the vulnerability to damage. You have the possibility of issues such as the paper getting torn or the ink fading away. Furthermore, you also have concerns about damage to the paper due to water and fire.
- The process of creating a paper wallet is quite sensitive, and you have to follow some precautions for setting up the wallet. On the contrary, a malicious printer could lead to the exposure of your private keys to unauthorized agents.
- If you are using paper wallets, then you would have to create a new wallet following each transaction for security reasons. Furthermore, people could also encounter issues about reusing the same address, thereby leading possibility of exposing your identity by tracing the sign of the private key.
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How to Create Paper Wallets?
The next crucial factor in any discussion on paper wallets would obviously refer to “how to make a paper wallet.” Interestingly, you don’t have to go through any complex steps for creating paper wallets. Here are some of the basic steps you can follow for creating your own paper wallet for storing cryptocurrency.
- Visit the BitAddress website. BitAddress is an open-source paper wallet generator that helps in the production of paper wallets. You could also find another notable example of a paper wallet generator in WalletGenerator.
- In the case of BitAddress, you need to navigate the website or enter random text for generating a random private key.
- After you get the private key, you need to select the “Paper Wallet” option and print out the result. Subsequently, you can have Bitcoins stored through the public address towards the left.
- Users can also add a passphrase for safeguarding the paper wallet with additional protection by using BIP38 encryption.
BitAddress provides exceptional functionality as a paper wallet generator, and you could create paper wallets within 30 seconds. Users could create as many addresses as they want by entering the desired amount in “Addresses to generate.” You would get all the unique and different addresses.
Even if the answer to “how to make a paper wallet” definitely looks quite simple in the above-mentioned steps, it has some inherent setbacks. The foremost risk in such a process of creating a paper wallet is internet connectivity. You are connected to the internet when creating private keys for your crypto assets and risk the exposure of private keys.
Subsequently, if any hacker compromised the BitAddress website, they would easily access all the private keys created through the platform. Furthermore, the system on which you are creating the paper wallet might be infected with malware. Is there any safer way for creating paper wallets without the security risks outlined here?
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Secure Approach for Creating Paper Wallets
As you can notice the setbacks associated with the easy answer for “how to make a paper wallet,” you should look towards the advanced approach for setting up paper wallets. If you want better security for your crypto assets, then you need to create a heavily secure paper crypto wallet. Even if the process might take some time, you need to consider the implications of security for valuable crypto assets.
Essential Requirements for Creating Paper Wallets Securely
If you want to build a paper wallet for Bitcoin or any other cryptocurrencies, you need some essential tools. You need an operating system like the latest version of Ubuntu and another software LiLi, which helps in installing Ubuntu on a flash drive. In addition, you also need to download the BitAddress software, which will help you in creating the paper wallet. Another important requirement in the advanced approach for the creation of paper wallets refers to a completely formatted or brand new flash drive.
Once you have all the necessary tools for creating a paper wallet for blockchain assets, you are ready to start the process of generating the paper crypto wallet. Here are the steps you would have to follow for a secure approach to the creation of paper wallets.
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Installation of Ubuntu on Flash Drive
The first step in creating paper wallets securely starts with the installation of Ubuntu on the flash drive. You need to open LiLi and insert the flash drive into the computer. It is important to select the right drive, and you need to click on refresh if you don’t find your flash drive. Now, you should select “ISO/IMG/ZIP” followed by selecting the Ubuntu ISO file which you have downloaded already. You should also ensure that the “Format the key in FAT32” option has been selected.
Once you are done with all these steps, you can just click on the lightning bolt to begin the format and installation. After the format and installation procedure, you need to unzip the BitAddress software file you had downloaded earlier and copy it in your flash drive.
Test Your Printer in Offline Environments
The second step in how to make a paper wallet securely would involve testing your printer in an offline environment. All you need to do is disconnect your computer from the internet. It is also important to ensure that you have prevented all ways from granting remote access to the computer. With all these conditions in place, you need to check whether your printer works perfectly by printing a test page.
Operate Your Computer with Ubuntu in Flash Drive
After testing your printer, you need to restart your computer. Just click on F1 or F12 during the boot-up process, and you can get the option of running your chosen operating system from the flash drive. Once the Ubuntu operating system has finished loading, you must select the “try Ubuntu” option.
Setting Up the Printer
The next step in creating a paper wallet for blockchain assets involves setting up the printer on Ubuntu operating system. You can start by clicking “System Settings” followed by “Printers” and then “Add.” Subsequently, you could add your printer and then print a test page.
Access BitAddress to Open New Wallet
In the final step, open the BitAddress application, where you have to create a local paper wallet on the desired machine. Select private browsing in Firefox and type the address file://cdrom/bitaddress.org-master/ and then click on “BitAddress.org.html.” You can now generate a paper wallet just by navigating your cursor till the number on the top right reaches 100.
Now, you should select “Paper Wallet” in the menu and choose the number of copies you want to generate. Furthermore, you would also get the option of adding BIP38 encryption if you want an additional layer of protection. Finally, you can print out your paper wallet for Bitcoin or any other cryptocurrency of your choice.
The advanced approach for creating a paper wallet takes away internet connectivity, thereby ensuring better safeguards for private keys. In addition, you would also use an “out of the box” operating system, which reduces the possibilities for malware infection. Users are relying on an offline variant of BitAddress, thereby rendering it invulnerable to hacking attacks.
However, you also need to follow some best practices for the safety of your paper-based crypto wallet. For example, make sure that it is laminated to avoid any damage due to fading or tearing away. The wallet should stay in a safe or a restricted location that you can access.
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As you can notice, paper wallets are definitely one of the best choices when it comes to storing huge amounts of crypto. It does have some risks, and so do other variants of crypto wallets. The most interesting thing about paper wallets is that they are easy to understand and create. You can find quite simple procedures for “how to make a paper wallet” and that too with advanced measures for improved security.
Paper wallets can be great instruments for driving crypto adoption in the future. Therefore, crypto enthusiasts could definitely discover promising value in learning about paper wallets. Learn more about crypto wallets and how they can help you with the management of your crypto assets.
*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!