Paper wallet

What is Paper wallet?

A paper wallet is a method of storing cryptocurrencies offline by printing the wallet’s public and private key pair onto a physical medium, such as a sheet of paper. The keys are often presented both as plain alphanumeric text and as QR codes to allow for easier scanning and transaction facilitation. Since paper wallets are not connected to the internet in any way, they are considered a form of cold storage and are particularly valued for their immunity to cyber attacks, malware, and online phishing attempts.

Paper wallets are typically generated using open-source tools or wallet generators in an offline environment to avoid exposure to potential security vulnerabilities. The user creates a new key pair through such software, prints the keys on paper, and deletes any digital trace of the generated keys afterward. Once created, the wallet can receive cryptocurrency just like any other address by using the public key. However, to spend or transfer those funds, access to the private key is required, which must be manually entered or scanned into an online interface.

Because of their offline nature, paper wallets are most suitable for long-term storage rather than frequent use. They are often used by individuals looking to store larger amounts of cryptocurrency in a highly secure manner without relying on digital devices. However, this approach comes with significant responsibility. Paper is vulnerable to physical damage such as fire, water, and wear over time, and it can be easily lost or stolen. If the private key on the paper wallet is compromised or destroyed without backup, access to the associated funds is permanently lost.

To mitigate risks, users often laminate their paper wallets, store them in safes, or even split the keys into parts and store them in separate secure locations. Some may use tamper-evident envelopes or security seals to detect unauthorized access. Because of these challenges, while paper wallets offer excellent protection against online threats, they are not generally recommended for casual users or frequent traders without sufficient understanding of proper storage and recovery practices.