What is Bitcoin Paper Wallet
Bitcoin paper wallet is an offline strategy to store bitcoins. It is a piece of paper on which the private key or the seed phrase is written. It comes under the category of cold wallet and It is one of the ways to keep your Bitcoins off the internet. It has pros and cons which we will examine. Also we will try to understand how can we create our own paper wallet.
The paper wallet will consists of two types of data. It will have your public key which allows people to send money to you and it will have a private key which you can use to spend the funds in the wallet.
How To Create Bitcoin Paper Wallet
Creating a paper wallet is an easy process. The whole process will take maximum a minute.
1-Open the site https://bitaddress.org. This is a key generator program which we use to generate a private key and later print the QR codes.
2- Keep moving your mouse to generate your private key. You can also write some random characters on the text box.
3- Next Click on Paper Wallet. Here you will see different options as show in the screenshot.
4- You can choose how many copies you want to print.
5-You can also add a passphrase and encrypt your wallet with BIP38 password. This is an optional step.
6- You can generate many addresses by entering the amount in the Addresses to generate text box and these all addresses will be different.
7- Finally you will click on the print and you have your own paper wallet.
Advantages of Paper Wallet
1- A paper wallet is a non-custodial wallet. This gives you the advantage of control your private keys yourself.
2- The wallet is not connected to the internet, therefore it is safe from hacking attempts. You cannot hack a piece of offline paper.
Disadvantages of Paper Wallet
1- Since this is done on your computer screen and connected with the internet, an intruder may have the ability to see what was being run on the screen.
2- All the private keys are stored in BitAddress site (or any key generator site), so if the site is hacked or compromised, they can get hold of all the keys and our funds would not be safe.
3- You never know if your system is infected by malware and this also may put your paper wallet at risk as all your inputs may be recorded.
4- The private keys are stored on the piece of paper. In case of loss or damage of the paper wallet, you will lose your Bitcoins.