Cryptocurrency is the latest and most exciting investment trend the world has witnessed in decades. It is a technology that has given rise to free trade sentimentality and has created an open market that is free of government or corporate meddling and influence. With this great freedom of trade amongst individuals comes some risk of storage and security.
The threat of hackers stealing your hard earned cryptocurrency profits today, is as real and common as bandits stealing your gold was in the Wild West. This is why securing your large or long term cryptocurrency holdings is the most important concern of those that have significant savings of it.
Simply put, a typical cryptocurrency wallet is a program that can generate public and private keys, synchronize with the blockchain, and keep track of your cryptocoin amounts. While there are many wallets to choose from, for large long term storage you need the most secure and foolproof solution available. The more secure the mechanism of storage, the less convenient it is.
For example: Cold storage and paper wallets are not as easy to spend with, and paper wallets won’t be able to display your new balance without you manually writing it on the paper!
The sacrifice of convenience for the highest security is what makes paper wallets the most attractive to long term cryptocurrency holders. If you don’t need to access your storage of savings too often, then you won’t need a convenient and quick way to spend it. Also, once you utilize your printed private key at some online location, it is no longer safe as a medium of long term storage. So spending paper wallet savings should be avoided, or saved for cashing out large sums all at once.
The simplest and most secure approach to store any digital currency is to create a paper wallet. A paper wallet is simply a printout of your private key and public key. This means that you have a physical paper with your unique private key stored, as opposed to having it somewhere on a machine. This type of wallet ensures that you don’t have to worry about some hacker, or malicious thief, accessing your private key and using it to steal your cryptocurrency.
There are very few drawbacks to using a paper wallet, such as tracking your balance is not as convenient as a digital wallet, and you will need to write the new balance on the paper if you change it. However, the few minor drawbacks are nothing compared to the benefits of a secure paper wallet. The unmatched security and control that a paper wallet ultimately gives you, is well worth the loss of some minor conveniences.
Paper wallets can easily be generated offline, secured physically in a safe location, and they can be redeemed just as simply as any other wallet – using the same methods such as QR codes. Just remember that their best use is for long-term “cold” storage, and not for frequent transactions.
Why make a paper wallet?
First and foremost, if you are keeping your cryptocurrency on an exchange or online wallet, you don’t really own your cryptocurrency! If you are looking to hold on to a long term investment or savings, the most secure and safe option is arguably a paper wallet.
Some may say that a hardware wallet is just as good or better in some cases, but those can fail or break, and can just as easily be lost. Backing up your properties in paper and storing them in a safe place is a time tested tradition that works for deeds and stock certificates, and it still is the best choice for responsible cryptocoin owners as well.
How to make a secure paper wallet?
The most common way to make a fully secure paper wallet is to go to a website like walletgenerator.net or bitaddress.org and then download the repository copy of the website software that runs them. You can then transfer that download on an offline computer and use it to generate a completely randomized paper wallet.
The printing of the randomized paper wallet should be done with a direct cable to the printer, not a network printer. Because a good hacker could easily grab the print files from a networked printer and find out your private keys. Now, this may seem overly paranoid and unnecessary, but it does not hurt to do and it will give you peace of mind. That is about all you will need to do, to create a paper wallet, it is that simple!
For those that really want a step by step breakdown, keep reading. By following these few simple steps, you can easily set up a secure paper wallet.
Step by step:
- Visit the website you want to use on a secure computer. If you are doing this for bitcoin, just go to bitaddress, but if you are doing this for any other altcoin, go to walletgenerator.
- Download the page you have chosen at the “GitHub Repository” link at the bottom of the page.
- Transfer that download onto your totally offline computer, use a USB stick or whatever offline means you have.
- Open the index.html file and generate your random wallet address or multiple addresses.
- Print out your generated paper wallet or wallets via a cable attached, offline printer. Make multiple copies of each, and save them in different places too. This way you are protected if one is destroyed.
- Copy your public address somewhere where you can use it as often as needed. Then send your cryptocurrency to the public address of the wallet, and then write the balance of coins in the space given.
- Store your physical paper wallets in a secure place, such as a safe or safety deposit box, etc.
How to deposit to your paper wallet
This is the simplest thing to do, it works like any other method of depositing cryptocurrency. Once you print out your paper wallet, you will have a QR code of each key, the public and private. You can scan the public key with any software you choose, or even write down the public key manually.
Once you have your public key copied, you are ready to use it just as you would any other wallet generated public key. Just be sure to have your public key stored anywhere that is convenient to you, and use it to send money from your other wallets, or to receive cryptocurrency from another party.
How to withdraw from your paper wallet
Withdrawing from your paper wallet is a bit more complicated than depositing, and it requires you to use online resources. You can either scan the private keys QR code, or manually type it into whatever program you are using to withdraw. Withdrawal of a paper wallet is really no different than using any other method.
Just keep in mind that once you put your private key data into an online computer or an exchange, it is now vulnerable just like any less secure method. You should only ever withdraw from a paper wallet when you are looking to completely “cash out” of your cryptocurrency savings.
So, as you can see, using a paper wallet is no more difficult than using any other wallet, and it is not much different either. There are just a few more steps to setting it up and securing it offline, and the benefits greatly outweigh the little bit of extra work needed. If you are looking to hold your cryptocurrency long term, as an investment, then this is the best choice of storage medium.