Validate or decrypt Private Key
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Paper wallets are a form of cold storagemeaning that the private key has never touched a computer with internet access. This is one of the most secure ways to store Bitcoins when done properly. You should never use a paper wallet you did not create yourself. For that reason, this is a tutorial to create a paper wallet in a secure fashion. A repository of paper wallet generators can be found here. You can choose to use my repository directly if you wish, but I recommend going straight to the source.
There are many options with different formats and templates, however I highly recommend BitcoinPaperWallet. This is the most secure and well thought out design I have seen. The author has done a great job addressing the various attack vectors. His website is easy to use and provides all the relevant information needed. Furthermore, the generator is based on the popular and trusted bitaddress. This paper wallet is perfect for cold storage and archival, but it takes a little extra work and materials to secure it properly.
Fortunately, everything required can be bought right from the website, and you can pay in Bitcoin! This is best because each paper wallet requires two stickers, so the numbers match.
The alternative link only provides one sticker for each number. For additional artworks, check out Liberty Paper Wallet Github. Paper wallets are extremely vulnerable to water. Consider laminating your paper wallet for extra protection. An alternative could be to vaccuum seal it using a Foodsaver Vaccuum Sealer. At the very least, you should keep the paper wallet in a ziplock bag.
Paper wallets are also extremely vulnerable to fire. However, there is not much you can do about this other than keeping multiple backups in different physical locations, such as a safety deposit box. Remember, if you lose your paper wallet, or it is damaged, you lose all the coins stored at that address! Paper wallets need to be created offline on a secure machine. Grab the ISO and burn it to a disk.
Save a copy of bitcoinpaperwallet onto a USB drive. For this tutorial, in order to get screenshots I am using a virtual machine. Do not use a virtual machine when doing this for real!
Before creating the paper wallet, you will want to ensure that your printer works correctly. If possible, use a dumb printer, and try to ensure that your printer does not save a copy of printouts to internal memory. Use this time to get any drivers you need from the internet.
Time to disconnect from the internet. Unplug the ethernet cord, turn off any wireless cards or routers as necessary. Verify that you are not online. Open up the html file in Tor Browser. Follow the instructions to generate your paper wallet.
You have the option of using the built-in random number generator, or supplying your own random numbers using dice or cards. For maximum security, you should use dice or cards. I found that taking a deck of cards, shuffling it seven times, and picking the first 32 cards off the top worked well.
Remember to shuffle the cards again after you are done! There are pros and cons to encrypting your paper wallet. Encryption adds an extra layer of security by requiring a passphrase before being able to import the private key again, which is great if the paper wallet ever gets stolen.
However if the passphrase is forgotten, the coins are lost forever. In addition, some wallet software does not support BIP38, which may make reimporting difficult. Finally, it is important to realize that BIP38 encryption will NOT help if you chose an insecure passphrase for a brain wallet. In general, BIP38 encryption is recommended. You will want to print two wallets by spinning the paper after each print. You will end up running the sheet of paper through the printer a total of 4 times.
Now is your chance to verify the paper wallets. Make sure you can scan the QR codes, make sure the private key and public key match, etc. Cut out each design by following the lines on the front. Fold the wallets and apply the stickers. If you have a laser printer, you will want to include a small 1in x 1in square of paper between the private key and the candling pattern when folding the paper.
Later on, we will be laminating the paper wallet, and the heat can cause the toner on each side of the fold to fuse together. Sign the back and write the sticker numbers. This prevents someone from simply replacing the stickers or entire wallet without your knowledge.
Put both paper wallets into a laminating pouch and run it through the laminator. Cut out each wallet, and store them in physically separate, secure locations. You can scan the public key into Electrum or Mycelium as a watch-only wallet to keep track of your funds. Eventually you will want to spend the funds.
First, you need to delaminate the wallet. Cut a line along the edge closest to the paper where there is a tiny line of air, and peel away the laminate. Unfold the flap to access the private key. As you can see, it is still safe and legible, even after the lamination process.
Now comes the important part. You must take all the funds in one shot; do not attempt to partially spend the funds in a paper wallet. This is due to how Bitcoin Change works.
When spending Bitcoins, ALL coins from that address are moved to new addresses. Normally, an electronic wallet manages this for you behind the scenes, however when using a paper wallet directly, you will not have this control. Read more about change here.
Once the paper wallet has been swept into the electronic wallet, it should be destroyed and never used again. Shred it or burn it. Water is the Enemy. Make sure you are offline. Unpack the Zip File. Revealing the Private Key. Please enable JavaScript to view the comments powered by Disqus.
