A bitcoin paper wallet is akin to a type of document which contains all the necessary information to produce any amount of Bitcoin keys- all private ones. Thus, it’s a wallet with keys instead of cash. A bitcoin paper wallet is one of the few safest options available to keep your bitcoins secure. This article focuses on how these digital coins can be converted into a physical form, which protects the user from hacking attempts.
Table of Contents
- Raison d’être: Why go to so Much Trouble?
- What is a Bitcoin Paper Wallet Made of?
- Advantages of Bitcoin Paper Wallet
- Disadvantages of Bitcoin Paper Wallet
- How to create a Bitcoin paper wallet?
- Using Bitcoin wallet on the android
- Bitcoin Paper Wallet Generation- An Example To Set Things In Perspective
- How can the Bitcoin Paper Wallet be Kept Secured?
Raison d’être: Why go to so Much Trouble?
If you’re a Bitcoin user, you would know that transferring Bitcoin to any other person requires a combination of your private key and the recipient’s public key. Similarly, every Bitcoin user has a set of two keys- one public and which also functions as the address via which other people send you money.
The other is a private key which is like a password. So anybody else having it can easily withdraw your funds. Needless to say, this one is supposed to be kept hidden from the public. This key proves that you have the right to use the bitcoins that have been transferred to the wallet.
Another easier way to think about the key concept is to imagine a normal mailing process. If I know your mail address, the most I can do is send a mail to you. I cannot access your mail id without your password. You and only you, having the password, can check out your mail and reply to it. Now apply the same logic to the bitcoin. Your mail id is similar to the public key/ address. People would be able to send coins via this (using your address along with their own private keys). However, to access the coins, you must enter your private password which is nothing but the private key.
Because the private key plays such a crucial role, its protection too is of utmost importance. It is not safe keeping the funds/ coins in a computer that is connected to the internet, or on a hard drive based system or an online wallet. All these are prone to attacks and/or unsafe for some or the reason. One of the most popular methods that hackers use is to get hold of your keystroke. Another way you can lose all the funds is if your hard disk crashes.
Protection of the private key can be done in multiple ways. The key could be split it into many different parts. Another method is to encrypt it to save it from being revealed accidentally. Right now, there are mnemonic codes for wallets where the code can be printed or written to create a multiple key wallet. Eg: Electrum and Armory. If you want to create single keys, there are options like VanitygGen, Bitcoin Address Utility, Cwallet. But bear in mind that single keys should be used only for one time transfers and not more than that.
However, instead of going all heavy duty and employing any complicated methods, a basic solution can be used- using a bitcoin paper wallet. If done properly, this can save you from a lot of heart burn later. Also, multiple paper wallets- like Multi-bit wallet, CoinBase wallet, Armory wallet etc- can be used. There are plenty of options to choose from
What is a Bitcoin Paper Wallet Made of?
Put simply, a bitcoin paper wallet is a document that has a copy of your private and public key. To facilitate quick and easy transaction, it mostly comes with a QR code, so as to enable you to scan the keys and add them into the software wallet.
Advantages of Bitcoin Paper Wallet
1. The most crucial advantage of a bitcoin paper wallet is your keys are not stored digitally. And that makes them immune to any hardware malfunction or hacking attack attempts.
2. You are the sole owner of the paper wallet
3. You are self-sufficient and do not have to depend on the security provided by any other website
4. A paper wallet is physical and hence safer to store and keep safe
Disadvantages of Bitcoin Paper Wallet
1. The biggest disadvantage is if you ever lose your paper wallet, you will end up losing access to the bitcoins sent from that address.
2. The other major issue is that the paper that is used is a little fragile and prone to ink degradation.
How to create a Bitcoin paper wallet?
1. Log on to BitAddress.org in your browser
2. On the site, you would be able to see a number of tabs. Click on Paper wallet. Make sure the printer is set to high-quality page printing
3. Decide the number of addresses to generate and enter the details.
4. In case you wish to avoid the Bitcoin artwork, click on the ‘Hide Art Button’
5. Click on generate to get your brand new wallet
6. To print a copy, click on print
7. Make sure you save the public addresses or better yet, scan the QR public code in your app
Using Bitcoin wallet on the android
Using the Bitcoin wallet in an android app is easy. The address has two parts- the private and public keys. If you have only the public key, the app can only view the balance and check out the transactions. To spend ad transfer funds, the private key is needed.
1. Download the android app in case you have not, using this
2. Within the app, click on the menu button at the top and select ‘Address Book’.
Then next, click on menu and scan watch only address for scanning the QR codes on the paper wallet. You can also label the address if needed.
To know more about spending and receiving coins, check this out.
Bitcoin Paper Wallet Generation- An Example To Set Things In Perspective
Here we would see how to make a paper wallet using Bitaddress.org. This is a trusted open source bitcoin wallet generator. To ensure the connection is secure, you can check if the URL www.Bitaddress.org is preceded with the word ‘https’ along with a green lock.
Go on the site and right click anywhere on the open space, click on ‘save as’ and save the page as an html file on the computer, preferably somewhere easier to access like the desktop. Now, disconnect your system from the internet. This ensures that any kind of bugs, viruses etc. will not be able to gain access to the internet, ensuring further safety.
After disconnecting, double click on the file which would open it up in a web browser. Now we are finally ready to create a bitcoin wallet. If you move your mouse a bit, you’ll notice it creates randomness. Also, you would see that within the box at the screen centre, a code is constantly changing. Wait for the code to run out of alphanumeric characters and for a screen to come on display. This is where the bitcoin wallet would be generated.
There are many tabs on the screen and the tab selected by default is the ‘single wallet’. We can create a bitcoin wallet by clicking on the ’generate address’ but then it would not be encrypted here. The tab next to it is called the ‘paper wallet’. Click on it and check the box labeled ‘hide the art’. You can specify the number of addresses you need generated, next to the relevant box. So, to generate a single address, type in ‘1’ within the address box.
You would also see a box labeled as ‘BIP38’ which is for encryption. Check this and enter the password, which would be used to decrypt the wallet, in the box beside the label. Finally, click on ‘generate’.
We get our address and the encrypted private key (which, if you notice, is typically longer than the address). This private key needs the password that you entered, in order to open up.
The next step is to print this page. Ensure the printer too is offline. Also, print out more than a single copy to ensure safety. Lastly, ensure you have the password written somewhere because if you lose it, there is no way to get it back and all the money is lost.
After this entire process, clear your browser history, cache and cookies. You would also need to restart the system and reconnect to the internet.
The next step is testing if the bitcoin wallet works properly or not. As an example, say you deposit $5 into the wallet. This can be done in a number of ways. We can use another wallet- like the multi-bit wallet. This can be downloaded from www.multibit.org, which is an open source wallet and is also password protected. Open the multi-bit wallet, copy the public address of the new wallet and paste it to the multi-bit wallet. You can label the transactions for easier remembrance. Click on send, enter in the password for multi-bit and again click on send.
Typically, it takes about 5-8 minutes for the money to arrive in the new wallet.
To check if you have received the funds, copy the new wallet’s public address; paste it in the search box on the site www.blockinfo.com and click on search. This would let the user know how many transactions have been received by the wallet and the amount. So, if everything has gone well, you would be able to see your transaction, the amount of Bitcoins that represents and the final balance.
Sending bitcoins from the wallet is easy too. Go to www.blockinfo.com and create an account/ login. Click on wallet at the top right corner. Blockchain allows you to not only check the public address (as shown above) but also import the private key so as to recover the funds. Put in the password and then click on ‘I understand’. Then copy the private key of the new wallet and paste it to the ‘import private key’ text box and click on add. Next, enter the password set for the wallet. This ensures that even if somebody has your private key, they would not be able to use it unless they also had the password. A little notification comes on at the top right corner stating that the wallet has been synced successfully. Also, you would see the BITCOIN balance showing on the screen has changed.
How are Web-based generators?
How can the Bitcoin Paper Wallet be Kept Secured?
1. Ensure you always use an operating system that is clean. This rules out any malware and spyware on the machine. A good way to do this is via installing a Linux Operating system, maybe Tails, on a USB flash drive and boot the system. This particular system encrypts the internet traffic and routed via Tor.
2. Encrypt private keys via algorithms. This leads to a two-factor authentication system and makes it extremely safe. Bit address supports this type of encryption
3. Before developing the public and private keys, your computer should be taken offline and then the keys should be generated
4. The Paper wallet should be printed using a printer which isn’t connected to the internet
5. Never let anybody view your wallet
6. To ensure physical safety, the following can be done:
b. Put it in a sealed bag, away from water and heat
c. Use a safe if feasible
d. Can be given to family members for safekeeping
e. Give it to a solicitor who is also responsible for safeguarding your will
Overall, bitcoin paper wallets are easy to create, simple to use and one of the best options available to ensure your security is not compromised.