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In the most specific sense, a paper wallet is a document containing all of the data necessary to generate any number of Bitcoin private keys , forming a wallet of keys. However, people often use the term to mean any way of storing bitcoins offline as a physical document.
This second definition also includes paper keys and redeemable codes. A paper key is a single key written on paper that is used multiple times like a wallet this is strongly discouraged. A redeemable code is a single key intended to be funded and "redeemed" only once: Storing bitcoins on paper wallets is not safe unless very strict security precautions are undertaken during their initial preparation. Generating paper wallets is not recommended from an online PC.
Malware malware on the PC may be able to steal your paper wallet keys. For additional security paper wallets can be split into shares, requiring X of Y shares e. By creating a keypair, one can store bitcoins on a physical medium to be left as a tip or a gift. The recipient then sweeps the private key to their own wallet. A trusted provider can hide the private key inside a tamper-resistant token, and issue them as a form of bitcoins.
This requires those who accept it as payment to trust that when the provider produced the tokens, they loaded them with the correct amount of bitcoins, and that they have not been tampered with since then.
To redeem the bitcoin value, the token must be destroyed to access the private key. Often a bitcoin address is embedded on the outside visible, but there is no guarantee without destroying the token that this matches the private key inside, or, even if it does, that the private key is not replicated on multiple tokens or saved by the producer.
Proper paper wallets are often a very secure way of storing bitcoins, since they are not typically exposed to malware. They can also be easily stored securely in safes and safe deposit boxes. However, it may be more difficult to securely "backup" paper wallets, and due to the current sub-optimal software support, it may be easier to make a mistake that causes loss of bitcoins. Sometimes people try to use single keys as true bitcoin wallets. However address reuse is very bad for privacy and security.
Because of this, one is forced to choose between hazardous options:. Therefore, it is highly recommended that you use proper paper wallets which allow you to generate an infinite number of addresses from a single seed.
Proper, multi-key paper wallets usually take the form of a multi-word HD wallet seed mnemonic. The list of several words corresponds to some binary data that is used to generate all of the addresses.
Words are used to make it easier to avoid and correct errors. Trying to memorize an entire seed mnemonic is very difficult and is generally not recommended. A single key for use in insecure single-key paper wallets or redeemable codes can be represented in several formats, but typically the Wallet Import Format WIF is used, since keys represented that way are very short 51 characters and thus easy to re-enter when importing or "sweeping" it for withdrawal.
The private seed is used to prove your right to spend the bitcoins transferred to the paper wallet, and as such should be kept hidden and secret. If the private seed on a paper wallet is exposed for example in a photograph then the wallet may be used by anyone who sees it. To guard against accidental revelation, the private key displayed on the paper wallet may be encrypted or split into several different parts for example using Shamir's secret sharing scheme.
At the very least, the private key should be well hidden e. Currently, at least Armory and Electrum support generating mnemonic codes for their wallets, which can be written down or printed to make a multi-key paper wallet. Several tools exist for producing single keys, including Bitcoin Address Utility , vanitygen , and Cwallet. Again, using single keys for anything except one-time transfers of bitcoins is strongly discouraged. Even with careful code auditing, browser plugins or other websites may compromise the environment.
Some advanced printers have internal storage even hard drives that preserve copies of printouts. This is a risk if someone gets access to your printer, or if you dispose of your printer. There is also the possibility that a smart enough printer can be hacked. Consider StuxNet which was able to rewrite the firmware of non-computer devices indirectly connected to the Internet If this concerns you, use a "dumb" printer, and never let your printer have access to the Internet or to an Internet-connected computer.
An alternative using a printer for paper wallets is to write the private key and address with your own hand. Base58Check encoding used for Bitcoin addresses and private keys specifically excludes characters that look similar like 0OIl.
The mnemonic recovery seeds used by wallets like Armory and Electrum are also suitable to be written by hand. Paper keys, when used as wallets, are very different from wallets such as Bitcoin Core in that there is only one address in a paper key rather than a hundred or more online keys that are managed with full software assistance from Bitcoin Core. Note that importing a private key that may be compromised can result in the entire wallet becoming insecure.
For this reason, sweeping or sending the entire amount to a fresh address is generally recommended over plain importing. Because paper wallets only record the private key and address, wallet software which redeems the bitcoins must somehow learn about the balance of the wallet before being able to spend it. The solution with the best privacy properties is to import the private key into bitcoin-qt and rescanning. Nobody watching the bitcoin-qt full node from outside will be able to tell which address it's interested in because all the scanning happens locally on disk.
Unfortunately rescanning is quite slow, so most users are pushed towards using public blockchain explorers or Electrum servers. An address database created from all bitcoin addresses is nearly 1 terrabyte in size at of April and takes a long time to build up, so very few people will have this kind of thing locally for the few occasions when they redeem paper wallets.
Almost all wallet software today especially smartphone wallets relies on centralized lookups when redeeming paper wallets. This is another reason paper wallets are not recommended, the way that they function pushes people to ruin their own privacy. Retrieved from " https: Navigation menu Personal tools Create account Log in.
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