A paper wallet is a method of storing cryptocurrency, such as Bitcoin or Ethereum, offline by printing out the private and public keys on a piece of paper. It is considered one of the most secure ways to store digital assets as it eliminates the possibility of a hacker gaining access to your funds through an online attack.
Instead, you physically store your paper wallet in a secure location, such as a safe or safety deposit box, and only access it when you need to transfer your cryptocurrency. When creating a paper wallet, you generate a pair of cryptographic keys: a private key and a public key.
The private key is kept secret and is used to authorize transactions on the blockchain, while the public key is shared with others so that they can send you cryptocurrency. To create a paper wallet, you can use an open-source program like ‘Bitaddress’, which generates a random private key and its corresponding public key, as well as a QR code for easy access.
You then print out the paper wallet, which will typically include the private and public keys, QR codes for easy access to those keys, and a visual representation of the keys in the form of a string of letters and numbers. One of the advantages of using a paper wallet is that it provides an additional layer of security beyond traditional online storage methods.
A paper wallet is not connected to the internet, so there is no risk of hacking or online theft. Additionally, if you keep your paper wallet in a secure location, it is not subject to physical theft or damage. However, it is important to note that if you lose your paper wallet or it becomes damaged or illegible, you will lose access to your funds permanently. Therefore, it is important to keep multiple copies of your paper wallet in secure locations and to ensure that it is readable and intact.