Rock, Scissors, Paper Wallets
Saturday 22 March 2014
What exactly is a paper wallet?
A paper wallet is a document that contains copies of both the public and the private keys that make up a wallet. You may also see QR codes on a paper wallet. This is just an ease of use addition that allows you to quickly scan the QR code and add the keys into a software or online wallet so that you can conduct a transaction.
What is the benefit of the paper wallet?
The benefit of a paper wallet is that the private keys are not stored digitally anywhere, and as a result of this, they are not subject to cyber-attacks, hardware, computer or system failures.
So you are saying they will keep my bitcoin 100% safe?
Unfortunately, there may be no 100% safe way of keeping bitcoin safe. That is not saying anything negative about bitcoin, it simply is stating the truth. You should never have all of your bitcoin in one location as I discussed here. First, you need to make sure the paper wallet is created at a trusted site and second, you must take steps to ensure the safety and longevity of your paper wallet.
The disadvantage of a paper wallet is that paper and ink can and will degrade. Also, paper has a fundamental design flaw, being that it is very fragile. It will easily lose any battle with fire and water and so great care should be taken to keep it clear of these or other hazards. One of the other reasons it isn’t safe is that it can be easily stolen or seen by others. Even if a person has just a second or two glance at your paper wallet they could snap a quick picture or even be using a digital camera. They would only need a fraction of a second to glance at it, and later at home pause the footage and have all the info needed for full access to your fortune.
How do I go about creating a paper wallet?
Here are the steps to creating a paper wallet. First, you need to generate a new address and a great site for that is bitaddress.org. They will ask you to create some randomness by either randomly typing on your keyboard or even by moving your cursor around the screen.
To see the github info on bitaddress.org click HERE
To see the open discussion about the code click HERE
After generating the randomness needed, you will be shown your public and private keys and their corresponding QR codes. Then click the ‘Paper wallet’ tab. Select the number of addresses to generate. Click the ‘Generate’ button to create new wallets. Once the wallets are generated, click the ‘Print’ button to make a hard copy. It is a good idea, if you are interested in safety, to not use a network printer or a printer that saves printed documents. You can then make a note of the public address or scan the QR code in your bitcoin app and start depositing funds to your new paper wallet. If you use Blockchain.info, they have a nice paper wallet option as well by going to import/export and selecting the paper wallet option in the menu. If you look around there are some much more sophisticated options such as the one found at http://Bitcoinpaperwallet.com.
They even offer a package deal that will send you some plastic storage bags, some holographic tamper evident stickers and a customized Ubuntu "LiveCD" with the generator pre-installed. This is the safest option as you can boot your computer (or an old laptop) from the CD and create the paper wallets entirely offline. This is by far the easiest and safest way to print out secure wallets.
Do you have any tips for keeping my paper wallets as safe as possible?
1. Keep your paper wallet in a plastic baggie as this will help prevent it from getting wet and or damp. You can also consider laminating your paper wallet.
2. Store your paper wallet in a safe location. If possible, somewhere that is fire protected. Many may recommend a safe but if you read my article HERE you’ll see why a safe isn’t always the “safest” location.
3. Possibly place your paper wallet in a safety deposit box or with the person who holds your final will.
4. Think about keeping your paper wallet in several locations, possibly with trusted family members.
5. Remember to clear the printing cache: Note: Even if your computer is 100% virus, Trojan and malware free, the problem is that your printer driver and/or operating system may be keeping copies of the documents you print in some sort of "spool" or print queue. If a hacker or virus gets into your computer and knows to look for these cache files, then they can get to your private keys and "sweep" your wallets.
By taking these steps you are truly becoming safe with your bitcoin. It may seem like an awful lot of security concerns but in reality, there is no need to follow every precaution, especially if you are just generating some give away wallets with small amounts of bitcoin. You can use an online wallet generator on a trusted computer with a secure Internet connection. However, if you plan on storing larger amounts, I suggest you follow as many safety precautions as you can.
As Always Be Alert Be Accurate Be Aware
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