Paper Wallet
What Is a Paper Wallet in Crypto?
A paper wallet is an offline storage method that involves writing or printing the public and private keys for a cryptocurrency address on a physical piece of paper. It takes the form of a scannable barcode or Quick Response (QR) code alongside their corresponding alphanumeric text.
It is a low-tech, non-custodial cold wallet. This means you have complete custody of your keys – and thus your digital assets.
One of the merits of paper wallets is that they are disconnected from the internet, ensuring you’re safe from online hacks, malware, or phishing attacks. An attacker would have to physically steal your paper wallet to access your crypto. These wallets are also inexpensive and easier to create.
However, losing your paper wallet (whether through theft or physical damage due to natural causes) without a proper backup for recovery results in permanent loss of your crypto. In addition, the popularity of paper wallets has declined since 2016 due to their physical fragility and associated risks.
How Do Paper Wallets Work?
The two primary ways of creating such wallets entail:
- Analog random number selection – Involves performing a series of dice rolls to select random numbers. While this process is completely offline, it is time-consuming and quite tedious.
- Key generation software – Involves downloading an open-source key generator as an HTML file and running it offline. This allows users to create new addresses and public-private key pairs while keeping away from the internet.
The key generation software randomly generates two QR codes and two alphanumeric characters, which are then printed on a piece of paper. After its creation, the holder can share their public address to receive crypto in their paper wallets. In addition, users can scan the QR codes with a smartphone or manually input the keys to perform transactions.
Read our article on different types of crypto wallets on Ledger Academy to learn more about Paper Wallets.
