Assets on a blockchain are controlled via private keys and public addresses – which means anyone wanting to be in complete control of their crypto needs to be in complete control of their keys. For many people, a hardware wallet is the best way to achieve this level of control without sacrificing much convenience.
The biggest draw-back to hardware wallets is just that… they’re not free. Paper wallets, on the other hand, are free – and they can be a secure way to guarantee control of crypto assets. They are not as convenient as hardware wallets and they should generally be considered single-use – but they do have their place and they are certainly worth knowing about. Let’s talk about what they are and how to use them properly – then, after you’re properly informed, we’ll talk about how to generate them.
Paper wallets are more-or-less what they sound like – a piece of paper storing a public/private key pair. The public address on the paper wallet is where the crypto is held on the blockchain. The private key gives anyone with access to it full control over those particular assets. Simple enough, right? The apparent simplicity is both a strength and a weakness. Let’s discuss those before you start entrusting your crypto assets to pieces of paper.
Avoiding Paper Cuts
Paper itself can be folded, hidden, duplicated, and stashed away rather easily. That versatility is certainly useful for securing your private keys. The flip side of paper, of course, is that it is vulnerable to fire, water, dogs, burglars, children with crayons, and coffee spills… and the list easily goes on. If you have a single copy of your private key stored on a piece of paper – and then something happens to that paper – you’re going to be seriously upset (and probably irrecoverably poorer). Don’t have just a single copy of your paper wallets and make sure all copies are geographically distributed in case of an emergency to mitigate these risks.
Getting your keys on to a piece of paper may sound simple, but it’s actually the trickiest part of the whole paper wallet implementation. Obviously, you need to be sure that no one is watching you write down your keys. You might think that’s an obvious enough consideration – but remember that anything with a camera needs to be treated as a set of untrusted eyes.
Speaking of untrusted: using anything other than open-source, community-inspected software to generate your keys is not advisable. Closed-source software that generates your keys could be eavesdropping or determining how things are generated (ie non-randomly).
Don’t write on a sheet of paper that has any other sheets of paper underneath it – you probably don’t want phantom copies of your private keys created by the pressure from your writing. Use a trusted pen and don’t read out each character as your write. Yes, it should feel a little bit like you’re being as paranoid as an international spy – there are no “do-overs” if this information falls into the wrong hands.
Notice printing isn’t ever suggested above – writing is. This is intentional. Printer drivers and firmwares could theoretically store or leak information. The risk is probably small – but it is not zero. Why risk it? Be sure to write legibly and double-check every character as you go – and again at the end.
Note: Some people prefer to “print” their paper wallets to a digital file like a PDF or a Word document. This can easily combine all of the negatives of software wallets with none of the positives of paper wallets – and should generally be avoided. The exception is if you can competently encrypt the digital file and store a few backup copies of the encrypted version. If you can properly do this, “digital” paper wallets are fine – but be sure to leave decryption instructions for your loved ones in case of an emergency.
As for leaking information: any computer connected to the internet should be considered risky. It could be compromised – and you may never be capable of achieving 100% certainty that it is not compromised. Disconnecting your trusted computer from the internet while you generate your keys and copy them down might seem excessively paranoid – but it’s actually just good security.
This computer-trust issue will come up again if you ever go to actually use your paper wallet and associated funds. Spending your crypto will ultimately require that you enter the private key you had stored on the paper wallet into a computer to sign the spend transaction. At that point, especially if said computer was connected to the internet, the private key can no longer be guaranteed to be completely secure – and the remaining funds should be moved to a different address.
Generating a Paper Wallet
Now that we’ve had our security pep-talk, if you’re still reading it’s probably because you’d like to know exactly how to generate paper wallets. I’ll take this as my final opportunity to remind you – I, personally, strongly recommend hardware wallets because they render many of the above security considerations moot. That said, let’s discuss how to generate a paper wallet:
There are some well-known websites to facilitate paper-wallet generation. For Bitcoin there is bitaddress.org and for Ethereum there is myetherwallet.com – both of these websites can be loaded and then saved for offline use (or just disconnect from the internet after you initially load them).
Alternatively, you can use any trusted software wallet (again, preferably via an offline computer) to generate a wallet – then write down the public and private keys before erasing the wallet from the computer. In some cases, especially with less popular or newer cryptos, this may actually be your only option for generating a paper wallet.
I’m going to walk you through generating a paper wallet via MyEtherWallet – but no matter what you use, for any crypto asset, the concept is always the same. Generate a public/private key pair via a trusted method in a secure environment… and then store that information on a piece of paper.
MyEtherWallet Paper Wallets
To get started: open your internet browser and type MyEtherWallet.com into your address bar. Then 1) be sure to double-check the url and look for the ssl certificate information (lock symbol) in the top left of your browser. If everything looks good, feel free to disconnect from the internet at this point. 2) type a password you can remember and 3) click “Create New Wallet”.
You’ll have to 4) click “Download Keystore File” – the file that will be downloaded is your private key encrypted with the password you supplied earlier. Assuming your password is super-secure, you may want to keep this file around as a backup indefinitely. Otherwise, you can delete it after your paper wallets are securely stored. After the file downloads, assuming you read and understand the disclaimer provided, 5) click “I understand. Continue”.
Your unencrypted private key will be displayed. So will a big button that reads “Print Paper Wallet”… rather unintuitively, you will not click this button. Since you loaded the website and then disconnected from the internet, clicking this button simply loads a blank page. Instead, you should hand write your private key now. Then 6) highlight the private key and 7) copy it before you 8) click “Save Your Address”.
Next, you’ll need to verify your private key to get your public address. Go ahead and 9) click “Private Key” in the left hand column. Then 10) right-click and paste your private key from last step into the box. Verify the pasted private key against your hand-written copy.
11) Click “Unlock”.
You’ll be presented with 12) your public address. Write it down. Below it, you can click the eye symbol to re-verify your private key. It’s not a bad idea to hand write the public address and private key more than once – even on the same paper wallet – to guard against your own bad handwriting or potentially transposed characters.
To send your Ether from an exchange to your paper wallet, you can just send it to that public address. Start with an insubstantial amount of your Ether to be certain that you are comfortable with the process. After you’re comfortable, you can hold as much of your Ether on this wallet as you’d like… or spread it across several paper wallets.
So, there you have it – a hand-written paper wallet to hodl your Ether. At least until you get a hardware wallet. Make a few copies, store them securely – and, please, never lose them. They are not recoverable.
Securing your own crypto is just as important as investing in crypto in the first place. Removing middle-men is a big part of the blockchain revolution.