As a crypto investor, it’s paramount that you understand the different ways to keep your Bitcoin safe. While most of the media attention focuses on hardware and software wallet solutions, there is another effective way to store your Satoshis: a Bitcoin paper wallet.
This form of crypto storage is used by some of the biggest Bitcoin investors in the world. The Winklevoss Twins, the world’s first Bitcoin billionaires, reportedly keep their crypto in cold storage on paper wallets. The paper wallets are cut into pieces and stored in different bank safety deposit boxes throughout the country.
While this level of security may be a bit of overkill for most people, it does showcase the effectiveness Bitcoin paper wallets bring to the market. Luckily, there are much easier ways to employ a Bitcoin paper wallet strategy.
How a Bitcoin Paper Wallet Works
A Bitcoin paper wallet is a print out of your private keys. By printing out your private key, instead of saving it on your PC, you eliminate online threats. Paper wallets are ideal for HODLers and those with significant amounts of Bitcoin.
Bitcoin paper wallets are considered safer because they can’t be hacked, but they can be lost or stolen. When you store your Bitcoin offline it’s called cold storage. The advantage of cold storage is the elimination of threats from hackers, scammers, and all of those digital thieves lurking in the crypto space.
The main disadvantage of paper wallets is the possibility of losing your private key, and therefore all of your crypto forever. If you lose your paper wallet, say goodbye to your Bitcoin. If someone steals your paper wallet, they now control your Bitcoin. In a paper wallet scenario, protecting your key from prying eyes is critical.
Bitcoin Paper Wallet Disclaimer
If you only have a small amount of Bitcoin, or you trade your crypto often, it’s possible that a paper wallet isn’t the best option for you. Also, if you’re the type of person that’s always losing things or is terrible at keeping track of paperwork, you should avoid paper wallets. In these scenarios, you would want to consider one of the other Bitcoin wallets available in the market.
Types of Paper Wallets
There are two types of Bitcoin paper wallets available. Both keep your Bitcoin stored safely offline, but only one method protects you in the situation where your computer is already infected or currently monitored.
Non-Secure Paper Wallets
Creating a non-secure paper wallet is easy thanks to platforms such as BitAddress. When you open the BitAddress page you’re instructed to move your cursor until a new key is created. After that, select “create a private key” from the options menu. Then choose the paper wallet option. Boom, now you just print out the paper wallet, and you’re good to go. There’s also a 3D barcode that allows you to send and receive Bitcoin directly from your new paper wallet.
This process is easy, but it doesn’t do much to protect your crypto if your computer is already compromised. If someone has already breached your system, they now have the information they need to steal your crypto. Also, Windows malware exists that can monitor your computer screen.
On top of all of your onsite security concerns, there’s also the threat that someone hacks BitAddress’s servers. While this hasn’t happened to the company to date, their presence online does make them a target for potential hacks. To be extra careful, follow the secure paper wallet instructions.
Secure Bitcoin Paper Wallet
Creating a secure paper wallet for your Bitcoin is one of the safest storage methods. Your friends might say you’re paranoid, but hey, they don’t understand your passion for Bitcoin. In order to create a Bitcoin paper wallet that is truly secure, you are going to need at least a 4-gigabit flash drive and around an hour.
You will go offline and use a brand new operating system, coupled with the offline version of BitAddress, to create a secure paper wallet in this method. To accomplish these tasks you will need to download:
Start off the process by opening LiLi. Next, insert your flash drive and choose “ISOIMG/ZIP”. You will need to select the Ubuntu ISO file that you have already downloaded. LiLi will ask you if you want to format your flash drive in FAT32. Be sure that only FAT32 is selected and click the installation icon shaped like a lightning bolt. Once Ubuntu is on your flash drive you are now ready to unzip the BitAddress Offline file to your drive.
The next step is to take your PC offline. The best way to do this is to disable all Wi-Fi, cellular, and Bluetooth connections. Be sure your Ethernet is not plugged in. To be even safer, you can unplug your modem and router. The goal is to eliminate any chance of remote monitoring during the paper wallet creation process.
Restart your computer and boot your PC from your flash drive using the Ubuntu operating system. To do this, you will need to press F1 or F12 during your PC’s startup. A pop-up screen will emerge showing you your boot options. Choose the option that represents your flash drive. Allow Ubuntu to load on your PC.
Once Ubuntu is open on your PC, you now need to install your printer. This is done by clicking on the system settings options and scrolling to printers. Next, you will be prompted to add a printer. Add your printer by following the directions provided on-screen and print out a test page to verify everything works correctly.
Open Offline BitAddress and Print Paper Wallet
Now, you need to open a private browsing window in the Firefox browser. Enter in the address bar file://cdrom/bitaddress.org-master/. Then click on the “BitAddress.org.html” link provided. You will be prompted to move your cursor until the number in the top right of the screen reads 0.
You now have your new wallet address and are ready to print out your Bitcoin paper wallet. To do this, select the “paper wallet” option from the menu and follow the print directions.
Loading Your Bitcoin Paper Wallet
Your paper wallet will have your public address on the left side. This is the address you can use to load your paper wallet without exposing your stored Bitcoin to the dangers of the internet. The right side of the print out will have a spend 3D barcode, which allows you to send Bitcoin directly from your secure paper wallet.
Keeping Your Crypto Safe
Learning to keep your Bitcoin safe is an important part of becoming a savvy crypto investor. Now that you understand what a Bitcoin paper wallet is and how to create one, you are ready to start storing your crypto fortunes securely.