A paper wallet is an offline printout of your public and private keys that can be used to access your Bitcoin, Ethereum, or other cryptocurrencies. The keys included in your paper wallet are typically represented by a combination of character strings and QR codes.
Paper wallets do not physically store your cryptocurrency; they contain the keys to where your cryptocurrencies are stored on the blockchain. As a result, anyone who has access to your paper wallet can transact your cryptocurrency.
The main benefits of paper wallets are that they’re completely isolated from the internet if created properly and cannot be hacked like other digital interfaces. They’re an extremely portable storage method for your private keys. While dated by 2021 standards, most major exchanges still offer users the ability to create paper wallets.
Should you use a paper wallet?
We generally recommend that investors choose a reputable hardware or software wallet in lieu of a paper wallet due to the added durability, convenience, and, in some cases, backup capability offered by hardware and software wallets.
Paper wallets are viewed as an outdated method of storing Bitcoin, Ethereum and other cryptocurrencies, thanks to the advent of hardware and software wallets that offer greater ease of access, usability, and durability over a piece of paper.
Users who are afraid of their computer being compromised, are confident in their safety and security habits, or who otherwise don’t intend to transact their cryptocurrencies for extended periods may want to consider using a paper wallet.
How secure are paper wallets?
Paper wallets hold the advantage when it comes to security since there is nothing about a scrap of paper that can be considered “hackable” in the digital sense.
Aside from the initial creation of the paper wallet, which is generated using a computer, there is no need for any digital interaction of any sort until the next time you wish to access your cryptocurrencies.
In fact, beyond its initial creation, there’s no need to trust any digital entity, as the transition of your keys to your paper wallet puts the safe-keeping of your cryptocurrency squarely on your shoulders, which may appeal to security-minded individuals.
These traits can make paper wallets an effective “cold-wallet” for the long-term storage of your Bitcoin, Ethereum and other cryptocurrencies.
Paper wallet vs hardware wallet
Paper wallets are printouts of the keys that allow you to access your cryptocurrency while hardware wallets are physical devices, like USB sticks, that store and protect the keys to your cryptocurrency.
Hardware wallets are generally more convenient and easy to use than paper wallets since they can be directly plugged into a computer at any time and used rather than requiring the user to manually scan or enter their keys.
Some hardware wallets also feature their own offline interface and can be used to store multiple keys for different cryptocurrencies. They also sometimes offer backup recovery systems, which address the “finality” of losing a paper wallet.
Interested crypto-investors should consider well-known hardware wallets from reputable companies like Trezor or Ledger. Such products are durable and known to be highly secure and feature their own security protocols, like security chips and PIN verification.
Paper wallet vs software wallet
Software wallets are digital wallets that store your cryptocurrency locally on your desktop, mobile device, or online network. They generally take the form of software applications that are installed onto your respective device, but can be browser or web-based if a user is comfortable trading security for convenience, and trusts the security protocols of the wallet provider.
Software wallets offer instantaneous access to your cryptocurrency through your desktop or phone, making them the most convenient of the three options. They’re also generally free, which makes them more cost-effective than hardware wallets for investors who own fewer quantities of cryptocurrency.
Prospective crypto-investors thinking about getting a software wallet should consider wallets offered by reputable developers. Many blockchains even feature their own software wallets, like Cardano with its Daedalus and Yoroi applications, which are built by the creators of the blockchain and can offer ancillary capabilities, like staking or node operation.
Other software wallets are private, open-source, or built by developer communities, and can vary in their support, from single-cryptocurrency focused bitcoin wallets like Electrum to multi-currency compatible wallets like Exodus.
In many cases, software wallets can also be compatible with popular hardware wallets for investors who want to take a dual-approach to storing their cryptocurrencies.
Make sure you research available software wallets thoroughly and base your decision on security as well as compatibility, to ensure that your chosen wallet actually supports your desired cryptocurrency.
What are the risks of using a paper wallet?
Paper wallets rely more heavily on a user’s storage and safekeeping habits than any other wallet due to their fragile form and vulnerability to theft. Users of paper wallets face three primary risks, including:
- Risk of destruction or loss
- Risk of theft
- Cybersecurity risk
|Pro Tip: Wallet security depends on your device and habits|
Bear in mind that all wallets run the risk of intrusion if the underlying keys are used on an infected device. Always be cautious and take steps to verify that your device and network are secure.
Risk of destruction or loss
The paper you print your paper wallet on can be ripped or shredded, burnt in a fire, or lost outright due to negligence. There’s also the risk of your paper wallet becoming illegible over time due to fading, humidity, low quality ink, or improper storage. Make sure you take steps to ensure that your paper wallet is stored safely and securely.
To protect against the loss of your cryptocurrency, treat your paper wallet as you would any irreplaceable file. Unless you make copies, your paper wallet may be your only way to access your cryptocurrency on the blockchain. If lost, the underlying cryptocurrency could be lost forever.
Some users choose to laminate or print their paper wallets on hardier materials that stand up better to the environment. If you choose to do so, take care not to reveal your keys to any third-parties when having this done, as the wallet itself can be easily copied and stolen.
Risk of theft
Like any important document, be it a blank check, social security card, or bearer bond, a paper wallet can be stolen. If carelessly left in public view, thieves could snap pictures of your paper wallet without you ever knowing and use the keys captured in those images to access your cryptocurrency.
There’s no method for “cancelling” access to a paper wallet once it’s been stolen and used to access your account. You should therefore take care to store these wallets in a safe and secure location, be it a personal safe, bank deposit box or other secure storage method.
Users who choose to store multiple copies of their paper wallet to avoid the nightmare of losing their only key to their cryptocurrencies increase the likelihood that someone might obtain one of those copies. Always be careful when trusting third-parties to store your paper wallet and consider sealing your paper wallet within an opaque protective envelope when transferring the contents.
While a paper wallet cannot be “hacked,” the underlying software used to create them are subject to intrusion. Care should be taken when creating a paper wallet through a web-based generator as there’s no guarantee of confidentiality or security.
Well-known and trusted open-source generators should be used when creating a paper wallet. Care should be taken to secure your computer and local network as well.
Cybersecurity software should be used to sweep your operating system for any malware or other security breaches prior to generating your paper wallet. Your computer should also be fully disconnected from the internet.
Users who choose to put pen to paper and write down their keys should take care to ensure every single-digit and syllable is transcribed precisely and completely. Creating a wallet with misprints or recording your key erroneously may lead to the loss of your cryptocurrency, especially if no contingencies are in place.
How to create a paper wallet
The process of creating a paper wallet can vary depending on the exchange or program you choose. Always make security and privacy your top priority when creating your own paper wallet.
Regardless of whether you hold a paper wallet that holds Bitcoin, Ether or other cryptocurrency; to make a paper wallet, you’ll need to create a randomized private key using a key generator.
Here’s a step-by-step process on how to create a paper wallet:
- Find a wallet generator website (preferably open-sourced or offered by an exchange)
- Verify the security of your local system and scan for any malware or intrusion software
- Access the wallet generator website and save it to the web archive of your local device
- Disconnect your device from the internet
- Use the archived web file to generate your key and paper wallet
- Activate your printer from your local network and print as many copies of your paper wallet as you need
Once created, you can store cryptocurrencies on your paper wallet using your keys to access the blockchain. Once complete, make sure you take all necessary measures to safely and securely store your paper wallet away from the elements as well as any prying eyes.
How to check paper wallet balance
To check the balance on a paper wallet, you’ll need to use the services of a blockchain explorer.
Regardless of whether you hold a bitcoin paper wallet or an ethereum paper wallet, there are multiple blockchain explorers that allow you to verify the balance in cryptocurrency held by your wallet.
Some blockchain explorer websites allow you to quote the balance of multiple cryptocurrencies, like Blockcyper or Blockchain.com.
Once you’ve found your blockchain explorer of choice, you can access your balance by copying your public key and pasting it into the quotebox of your blockchain explorer. The blockchain explorer will then reveal the value of the underlying cryptocurrency located at that address.
For the purposes of checking your paper wallet balance, be sure to only use your public key and not reveal your private key for any purpose. A legitimate blockchain explorer will never ask you to reveal your private key.
|Pro Tip: Is it safe to check the balance of my paper wallet?|
It’s generally safe to check your paper wallet balance because you’re only using your “public key” to check the holdings at one particular address on the blockchain.
Public keys are unique in that they are cryptographically programmed to only allow for the transfer of assets into the wallet. Anyone can see a public key but nobody has access to transact the underlying cryptocurrencies without a private key.
Note the distinction between your public and private keys. Your public key represents the address that cryptographic tokens can be sent to. Your private key unlocks the right for the holder to spend the underlying cryptographic tokens.
If you’re interested in learning about other wallet types, check out our guide to crypto wallets.