A paper wallet is a bitcoin public address and its corresponding private keys printed on a piece of paper. This type of wallet can be generated from sites such as bitcoinpaperwallet.com.
Even when you keep the paper wallet under lock and key, anyone with the public address can still send you bitcoins.
The day you want to spend the money, you scan the wallet’s QR code using a phone or any other device with a scanner such as a CoinOutlet Bitcoin ATM.
Indeed, due to its offline status, a paper wallet is considered to be one of the safest places to store bitcoins, especially when it is in large amounts.
Nevertheless, just like anything else, paper wallets have pros and cons.
Pros of Paper Wallet
- As mentioned above, a paper wallet is offline. That makes it more secure because malware cannot reach and compromise it. A saying goes that it is easier to keep a piece of paper safe than to keep a computer secure.
- The private keys are in your full control. This is not the same as where you use a third party service to hold your keys, which puts your coins at the risk of being moved without your permission.
- With a paper wallet, you need to do little investment on the security of your devices in order to protect your bitcoins.
Cons of a Paper Wallet
- Since it is a piece of paper, the wallet is susceptible to damage such as getting soaked, torn or burnt.
- The fact that the wallet is something that can be physically possessed, someone can steal it from you and cash it. Remember the paper has everything needed to spend the bitcoins in the wallet
- Even though a paper wallet is offline, the private keys can be exposed during the generation and printing. This is especially if the computer and the printer used are connected to the internet during and after the process.