Ever been curious about how to make a paper wallet?
Or does the thought of making one intimidate you?
Is it even safe to make one?
Let’s find out in this detailed guide on how to create a Bitcoin paper wallet.
You may have heard the saying “not your keys, not your crypto.” One of the best things about Bitcoin is that it gives you complete control over your funds.
As long as you keep your private key safe and secure, no-one else has access to your holdings. Of course, depending on what you wish to do with your crypto, this may not always be possible.
Keeping Bitcoin on exchanges or in hot wallets sacrifices security for convenience and ease of access, which may be necessary when transacting or trading. But when you want to move your Bitcoin to safer, longer-term storage (also known as a cold wallet), what are your options?
Paper wallets are one method for long-term, secure Bitcoin storage. In this article, we’ll run through how to create a Bitcoin paper wallet, then go over some things to keep in mind when storing your Bitcoin on one.
A Bitcoin paper wallet is any private key or seed phrase that is printed onto paper. This usually takes the form of a public key and its corresponding private key, along with QR codes representing each. Other forms of physical key storage such as metal etchings (e.g. Billfodl, Cryptosteel) and physical Bitcoins also share many of the attributes of paper wallets.
A paper wallet’s main strength is that it enables offline storage of your digital assets. Think of it like storing your money in a vault, rather than a bank account. With a properly created paper wallet, there is no risk of your Bitcoin being compromised even if an attacker gains access to your computer. Physical control of the wallet is required in order to transfer the funds.
This also means that if your paper wallet falls into the wrong hands, that person has full control over your Bitcoin. Again, not your keys, not your crypto. A paper wallet is like a stack of cash (or a briefcase, depending on how much you’re hodling) and should be treated as such.
Paper wallets are the storage method of choice for the Winklevoss twins, early investors in Bitcoin and founders of the cryptocurrency exchange Gemini. Their holdings, estimated to be worth over half a billion dollars as of May 2020, are stored on multiple paper wallets that are cut up and placed in safe deposit boxes all across the U.S..
This creates a sort of multi-sig system, where the ability to spend any of the Bitcoin is dependent on having access to more than one fragment of the wallet, thus increasing security.
This also means that if you lose one fragment of the wallet, you won't be able to use the other to access your coins.
With that in mind, if you decide a paper wallet is the best way to store your Bitcoin, here’s how to go about making one.
Navigate to BitAddress.org. BitAddress is an open source program for creating Bitcoin paper wallets.
Move your mouse around the screen or enter random letters and numbers into the textbox to add randomness to the wallet creation.
This randomness is called entropy and will help ensure your keys are secure and resistant to brute force cracking.
Once you reach 100%, BitAddress will present you with a public key, a private key, and a QR code for each. To get a printable version, select Paper Wallet. You can create any number of wallets you like.
To add an extra layer of security by encrypting the private key, check the BIP38 box and enter a password. To conduct a transaction you will need the private key AND the password to the wallet from which you are sending funds. You can recognize a private key that has been encrypted by its first two characters, which will usually be 6P.
Print your wallet(s).
That’s the quick and easy way to create paper wallets online using BitAddress. However, there are a number of security concerns to take into consideration:
Your computer could be infected with malware, which would allow an attacker to see your freshly generated private keys, giving them full access to any funds you then load onto the wallet.
The website itself could also be compromised. You are trusting BitAddress not to view and record the private keys that you generate.
Lastly, printers have their own memory where the file containing your private keys could be stored. For this reason, do not use a shared printer to print your paper wallet.
The strength of a paper wallet lies in the fact that it stores your Bitcoin offline. To minimize any security risks, it’s best to minimize any exposure of private keys to the internet and preserve the trustless nature of Bitcoin as much as possible.
To securely create a paper wallet we will follow the steps outlined above, but take a couple of additional measures to address the security flaws.
This video outlines goes through the process, and each step is listed below for you to follow along.
Download the offline version of BitAddress from its GitHub repository. Here you will find the paper wallet generator’s open source code. Save this to a USB drive.
Next, you’ll need a secure computer. Ideally this would be an airgapped computer that has never seen the internet and never will. Alternatively, booting off a live installer will avoid most security issues.
This guide explains how to create a bootable USB drive off of which you can run Ubuntu, a popular Linux distribution. A Windows or Mac virtual machine will work in a pinch.
Extract the zip file on the USB and open the bitaddress.org HTML file. You’ll be taken to an offline version of the website.
Follow the same steps as detailed above, using your mouse and/or keyboard to create entropy, choosing the number of wallets you wish to create, and adding BIP38 encryption if desired.
Connect to a printer with a wired connection, not Wi-Fi, and print your wallet(s). You could also avoid any potential issues with printer security by writing out your public and private keys.
That’s it, you have now generated one or many paper wallets that you can use for cold storage of Bitcoin. If you used a live OS to generate your keys, be sure to exit out of it and reboot so all traces are erased from the computer’s memory. If you used an airgapped computer, it’s best that it never be connected to the internet.
You can safely share your public key, also known as the wallet address, and use a blockchain explorer such as blockstream.info/ to check the wallet’s balance.
A cold storage paper wallet works well as a vault that you deposit to, but rarely withdraw from. Once you make a transaction from the paper wallet, it’s best practice to transfer any unspent Bitcoin to a new wallet. Reusing wallet addresses negatively impacts your privacy as well as that of everyone you transact with, as it creates a web of inputs and outputs that make it easier to identify the owner of a specific address.
Additionally, when spending Bitcoin from a paper wallet (see below), you risk exposing your private keys in the same ways as when creating the wallet.
To send funds from your paper wallet, you will need to import or sweep your private key into a wallet client. Importing a private key simply adds it to the list of keys in your software wallet, preserving its unique address. This means that if someone got their hands on your paper wallet, they could still take control of the Bitcoin on it. Sweeping a private key transfers the funds associated with it to a new or existing address. This leaves the paper wallet empty.
You can import or sweep your private key into the software wallet by scanning the QR code with your webcam or typing out the private key.
As mentioned above, both of these options run the risk of exposing your private key to any keylogger or malware, which is why you should never reuse paper wallets.
Once the Bitcoin is in your software wallet, you can send it as you would any other transaction.
If importing a private key, note that if *any* amount of Bitcoin is spent using the software wallet, the paper wallet will be *completely* emptied. The Bitcoin network spends the entire balance of a private key and sends any leftover amount – the change – to a newly-generated private key in the software wallet.
Thanks to their physical nature and the fact that you control your own private keys, paper wallets are a secure option for long term cold storage of Bitcoin. However, they do have their drawbacks. If your paper wallet is damaged, whether by fire, water, or simply by degradation of the paper or its ink over time, your Bitcoin will be irretrievable.
It’s a good idea to laminate any paper wallet you create and to ensure that you use a laser printer, as other inks can bleed. The risks inherent in a paper wallet’s constructions can be mitigated, but if you find yourself buying a fireproof safe just to store it in, you might want to consider some alternate methods of cold storage.
Having gone through the pros and cons of a paper wallet, you should be in a good place to decide if this method of cold storage suits your needs. Another option is to store your Bitcoin on a hardware wallet, which is essentially its own airgapped computer.
It stores your keys and signs transactions within a secure enclave before broadcasting them to the network, meaning your private key never leaves the device. If you’re considering a hardware wallet for your long-term hodling, make sure to check out our guide to the best hardware wallets.
Alternatively, steel wallets benefit from the same offline security as paper wallets, while being much harder to destroy.
Paper rots, dissolves, and tears, while some steel wallets are able to withstand temperatures up to double that of a typical housefire. You get all the safety of storing your Bitcoin offline, without having to trust a piece of paper to keep its value (imagine that).