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How To Make a Paper Wallet
Although there are ways to manually generate a private key, the vast majority of paper wallet creators use a private key generator. Once a private and public key have been created, you are able to print a paper wallet, which because it’s not online doubles as a cold storage wallet. This will include the public and private key you’ve generated, usually as both a string of characters and QR codes.
Anyone with a paper wallet’s public key can send crypto to it as often as they like. Using the corresponding private key, you can move the crypto balance of the paper wallet into a software wallet. This transfers the funds to a new private key on your software wallet.
Paper Wallet Creation Risks and Best Practices
Besides the risk of loss, theft, fire, and water damage, there are other reasons paper wallets have gone out of style. For one thing, you must use a trusted wallet generator, but because many are open-source software, malicious hackers have created modified versions available online that can steal your keys. Make sure to carefully research wallet generators before using one. For best practices, you’d want to take the following steps:
Go to the wallet generator website and save the wallet generators as a web archive
Go offline and click on the web archive file to generate the key offline
Using a printer that isn’t on a public network, print the key
You can now be somewhat confident your key is confidential. However, some go further to ensure privacy by:
Running the generator file and OS (operating system) on a USB drive or another offline computer
Destroying the printer after wallet creation
Adding a BIP 38 password, which provides an extra level of protection by encrypting your private key with a password
If you just want to load the paper wallet with a small amount of crypto, most would find the first three steps more than sufficient. Others just print them right off a web generator online, but that comes with malware risks.
Paper Wallet Usage
Here are some reasons you may receive or make a paper wallet:
To give as a present in a card
Use as a giveaway or promo scratch-off card
As a way to learn and have fun
Use as a way to make an offline transaction
If you make a paper wallet, try to load it and then move the funds to your main crypto wallet. If you gave a paper wallet to someone, you actually just made an offline crypto transaction. Since the recipient has the keys, they now have the associated crypto. Adding a BIP 38 password would protect against physical theft since you’d also need the password to move funds from the paper wallet. If you send these gifts through the mail, the password could be delivered to the recipient independently.
Beyond Paper Wallets: Other Analog Cold Storage
Analog cold storage wallets besides paper wallets have been created, including “physical bitcoins” such as Casascius Coins. These come pre-loaded with fixed amounts of cryptocurrency. The private key is etched in metal beneath a tamper-proof holographic sticker. A benefit of this coin and similar versions is that they are waterproof and fire resistant. However, you can’t print back-up copies. You need to safely store these coins — the same way you would store cash or jewelry.
Other companies still offer loadable metal coins for some of the most popular cryptocurrencies. Of course, you have to trust that the visible public key matches the private key underneath and that the company didn’t store any copies of your private key. You can load them up with more crypto over time, and destroy them once you move the coin’s entire balance to another wallet. Like paper wallets, however, cold storage wallets like these have waned in popularity compared to software and hardware wallets.
Paper Wallets Are Not Recommended But Still Have Some Use Cases
While most don’t use or make paper wallets anymore, it’s valuable to know why. They’re simply not secure and safe enough — or as convenient — compared to other crypto storage options. Don’t put all your crypto on a paper wallet you made — but you could load a little bit. Print out a couple private keys and put $1 worth of crypto on them and put them in some birthday or holiday cards; you may just convince the recipient of your gift to join the crypto revolution.