Bitcoin Paper Wallets
Owning a bitcoin paper wallet means the address that holds the bitcoins has not yet been connected to the live blockchain, and so is not “active.” Until the wallet is connected to the blockchain, it is considered to be in cold storage (bitcoin jargon for an account being offline).
You can always check the balance of any bitcoin address by searching the blockchain, but to spend it you would need to associate the bitcoin address of the paper wallet to a wallet that is online.
Paper wallets are classed as the most secure method of holding your bitcoins if you do not intend to spend them initially.
When you send bitcoins to an address, they are stored in the blockchain, but to be able to spend them, you will need the private key. As mentioned, this is a long alphanumeric string of characters, and when linked to a bitcoin wallet, any coins associated will be accessible to spend via that wallet. So, a paper wallet is a very secure way of holding your bitcoins, but as with anything involving banking, you need to ensure you look after your private key.
When you create a paper wallet, make sure you are not connected to the Internet: If you are connected, there’s a chance that malware could intercept your data, record your private key, and have access to any coins held in your bitcoin address at a later date.
Here’s a quick tutorial on how you can create a paper wallet. The service used for this process is BitAddress.org, the easiest place to create new paper wallets for bitcoins.
- Visit BitAddress.org in your favorite browser.
- You will see a screen similar to the one shown that automatically generates new bitcoin addresses and private keys for you. Move the mouse pointer around a bit and enter random text in the text box to increase the randomness of your addresses and keys.
- Don’t save the private key and QR codes presented to you. Instead, click Paper Wallet.
- Select the number of addresses you want to generate.
- Hide the art if you prefer to, even though the standard design looks great. Glick the Generate button to start the generation process for your number of paper wallets.
- To save the paper wallets or simply print them out, click the Print button.
- Print your paper wallets or save them as a PDF to your hard drive. Saving them as a file is not recommended though, as it is best to print out these wallets as soon as they are generated.
- Scan the QR code on the left side with your mobile bitcoin client, or enter the public key address in the bitcoin client on your computer. In doing so, you can start transferring bitcoins onto your paper wallet. The private key, used to verify ownership of the account in order to spend the balance, can be scanned with the QR code on the right side.