A paper wallet is a form of cold storage, which means that you keep your access to your Bitcoins offline. A Bitcoin wallet consists of a 'public key' and a 'private key'. The public key is the address to send Bitcoins and the private key is the key to send the Bitcoins. So the public key can see everyone, but the private key must remain strictly secret.
The idea of a paper wallet is that you put your private key on paper and ensure that it is no longer available online. Now you can send Bitcoins to your address and via your public key you can still see in the blockchain what your balance is. You can keep this wallet in a safe or another safe place. When you want to sell them you have to create an online wallet and enter your public key.
As the name suggests, paper wallets are usually made of paper, although technically they can also be made of plastic or another material on which information can be printed sustainably.
What is printed on the paper wallet are the private and public keys, usually in QR form, the latter also serving as an address? You can simply copy and paste the "keys" into a text document and print it (afterward delete the copy on the computer). Or you can use one of the free web services that generate the printable wallet for you. The key generation usually occurs in your browser, so they are never sent on the internet. To be sure, you must clear your browser data after printing. Never store an image of the paper wallet on your computer or telephone.
Some paper wallet services have a handy design that you can cut, fold and seal, making them a lightweight and relatively safe form of offline Bitcoin storage. You send your Bitcoin to the public address shown on the wallet and then store it in a safe place.
What secures paper wallets is that they are completely offline (commonly known as "cold storage"). They are not within the reach of hackers and your Bitcoin is never trusted by third parties. As long as the paper wallet is safe, your investments are safe.
However, there is also the relative lack of security. Someone could find your hiding place, take your print, handle all Bitcoin that belongs to those keys and return the paper, so you would never know.
A safer version would involve folding the paper so that the private key is hidden from sight, the fold is stuck with a seal that can not be broken and replaced (just look for "sealed seals", there are many different providers and models) also with the intention to ensure that the personal key cannot be seen, even if the folded paper is held up to the light.
Even that is not particularly safe. What if the folder, tray or box in which you store it floods?
Of course, it is unlikely, but if you secure a lot of Bitcoin, it is worth considering worst case scenarios. So a well sealed plastic bag would help.
Apart from the obvious risks of fire or water damage, the ink may fade over time, rendering the "keys" unreadable. No readable keys / keys, no Bitcoin.
Even with paper wallets, you can check your balance at any time with blockchain.info (simply enter your public key in the search box). And with most online wallets you can import your paper wallet data. To spend that Bitcoin, you will be asked to enter the personal information or to scan the private key's QR code.
3 sites to create a paper wallet
https://bitcoinpaperwallet.com/
https://bitaddress.org
https://walletgenerator.net
These are random open-source address and key generators that use your browser's JavaScript engine, so no keys are sent over the internet. You can also move your mouse to make entropy, which makes the characters mix even more. That random sequence is then used to generate your public and private keys, which are displayed on the next screen for printing.
Bitcoinpaperwallet.org makes a print of a colorful paper wallet, with the correct fold lines, and sells stickers that you can use to seal them.
Mycelium offers an original and even safer way to generate paper wallets, with a USB dongle that you connect directly to your printer. The device generates a paper wallet that prints automatically without ever having touched your computer.
Hardware wallets are safely programmed devices that store and never reveal your private keys. This is an important function because we use private keys to sign transactions and restore your address. These hardware wallets can also be regarded as cold wallets, because they isolate your private keys, even when they are connected to the internet.
6 The advantages of hardware wallets
Private keys are never exposed to your computer.
The hardware is immune to computer viruses.
Your hardware requires that you confirm a transaction on your device (not the app on your computer) before you can issue coins.
Most hardware is coded with a pin, such as your bank card, which adds an extra layer security.
The software of the hardware company is usually open source that allows users to validate the full operation of the device.
Hardware wallets can host multiple cryptocurrencies.
The disadvantage of hardware wallets is that they cost money. However, it may be worth considering investing in a hardware wallet because it is safer, especially if you own a significant number of coins.
For example, let's say you unknowingly download a virus on your computer. When you open eg Electrum, the app is susceptible to malware just like any other software on your desktop. This means that your coins are at risk because your private keys are now displayed. Here are two ways in which a hacker can steal your coins:
If your wallet is not encrypted, it can set an order to send your LTC to a specific address in this case as soon as Electrum is opened.
He can record and view your screen to see if you accidentally show your private keys on the screen. Once he sees this, he can steal your LTC by importing it.
You do not risk any of these options if you own a hardware portfolio.
Some devices such as Trezor require a PIN code. Trezor is probably one of the better-known brands of a small subset of offline hardware wallets. With a Trezor wallet, the private keys are generated on the device and are never left - the keys are made deterministic and a seed phrase is generated when the device is initialized, meaning that if it is lost or stolen, a new device can be restarted on command.
Another device is the ledger wallet, which has a number of unique features thanks to the compatibility with the Chrome application for the ledger wallet. The wallet contains a microprocessor - the standard for the banking sector for securing data.
Both a paper wallet and a hardware wallet are very safe. The keys of a paper wallet that has been created online may have been stolen when it was created. If you really want to keep your bitcoins safe, you will, therefore, need a paper wallet that has been created offline or a hardware wallet.
If you want to take your profit and sell the bitcoins, you will first need to create an online wallet and import your private key from your paper wallet. This is quite a lot of work, but in the case of a long-term investment one-time, not so big a stumbling block.
A hardware wallet is better if you want to keep your bitcoins safe, but also sometimes want to take transactions with you. The hardware wallet is a kind of barrier between the online environment on your computer and the hardware your keys are on. This means that you can safely transact on an infected computer.
