Why do you need a paper wallet?
One of the challenges facing bitcoin’s adopters around the globe is storage. How exactly are you supposed to keep your bitcoins secure if you plan on keeping a significant amount in one wallet? Well, the answer for most will be a paper wallet. Due to the ingenuity of the cryptographic principles bitcoin was built upon, users only need to keep a public-private key pair in order to access their wallet. Your key pair can even be generated ‘offline’. Bitcoin wallets have become a valuable target for hackers, as the theft is usually untraceable and easy to profit from. To ensure hackers never get ahold of your bitcoin assets, we suggest keeping your surplus bitcoins in a cold-storage paper wallet. This will greatly reduce if even nullify the potential for theft.
What is a paper wallet and how do I make one?
A paper wallet is no different than a normal bitcoin wallet aside from the fact that it is not stored on a computer anywhere, and, as its namesake would suggest, it is a bitcoin wallet that you store on a piece of paper. This substantially limits the attack vectors a hacker would need to steal your bitcoin wallet. Because of this added security benefit, a paper wallet is typically used to hold bitcoins in ‘cold storage’, or an amount of bitcoin that you put in a more secure medium than just sitting on your PC.
Probably the easiest option for creating a paper wallet is bitaddress.org. They offer a straight forward webpage for creating a randomly generated paper wallet consisting of your public bitcoin address and private key. Follow the instructions and your wallet will be ready for use in less than a minute. Of course, don’t forget to add the bitcoins you want to keep in storage on your paper wallet before putting it away.
There are a number of other websites with similar free offerings, but make sure that the software has been vetted and ideally open source or at least from a reputable source. An unscrupulous paper wallet generator would be tantamount for theft.
If you want to step up your security game, the Mycelium Entropy is both an easy option for generating paper wallets and also eliminates the need for a PC altogether. The Entropy works with any printer that allows you to print from a USB stick, and automatically generates your paper wallet and prints it in one step. Unfortunately, it may be difficult to find one as the Entropy was a limited production, but it is still a great solution for further limiting the attack vectors for hackers.
Lastly, another great open-source option for generating paper wallets is Bitcoin Armory. This software is an excellent, feature rich wallet manager, and also supports generating paper wallets with the added security benefit of multi-signature support. This software suite is perfect for your security concerns and covers pretty much all the basis that a bitcoin wallet can offer.