Paper Wallet Guide
Posted on 20. July 2018 | By admin
Safe Storage Of Bitcoin, Ethereum & Co.
The safest way to store crypto currencies such as Bitcoin, Ethereum and Co. is a paper wallet. These are completely free of charge. With a Paper Wallet you actually become the master of your investment.
If you take all precautions, no one has a chance of getting your private keys. Of course, it is important that you have a record of your Paper Wallet. If you lose your private keys on the Paper Wallet, you lose all possibilities to get the corresponding crypto currency (this counts for all wallets).
What Is A Wallet?
A wallet is a digital wallet for cryptographic currencies. You can use it to store, send and receive crypto currencies. However, as in the real world, the wallet does not “store” your money. In reality, it ultimately stores your public key – your public key – and your private key – your private key. These “keys” help you to send or receive the respective cryptic currency. The coins always stay in the blockchain!
What Is The Public And Private Key?
Let’s compare it to the real world before we come to the terms public and private key. Imagine a vending machine. Anybody can put money in the machine, right? But not everyone can get money out of the machine, because you would need the key for the machine. Anyone can deposit money, but only the person who owns the machine or who has the key to it can withdraw it.
In our example, the vending machine is the public address – public key – to which anyone can send money or a specific crypto currency. You are the owner of the machine and the key to getting the money in the machine is the private key. By using the private key you can access your money and do what you want with it.
The public key is the address that anyone can use to send you money while the private key (more or less) is used to send another money. Watch out! ONLY YOU should know your private key, otherwise everyone in the world can use your wallet to send the money on it.
Under no circumstances should you lose your private key! If you lose your private key, you have a HUGE PROBLEM! (Yes, the uppercase letters are deliberately selected). You should use two different techniques to keep your private keys safe. We will come to the two techniques a little later in this article.
Now we will deal with the two methods of storage for crypto currencies for the time being: Hot storage and cold storage.
Hot Storage Vs Cold Storage
To understand the difference between the two types of storage, I will again take an illustrative example from the material world. A hot storage wallet is like a wallet you want to carry with you. The cold storage wallet can be compared to a bank vault.
If you use Bitcoin or the Wallet often, since you often send Bitcoins back and forth, trades, etc., then you should use a hot storage Wallet. However, if you want to keep your cryptocurrencies for a longer period of time, so you don’t want to sell or send them, then you should always use a cold storage wallet. One of the most popular cold sotrage wallets is the Paper Wallet!
What Is A Paper Wallet?
To keep it simple, a paper wallet is an offline cold storage method to store cryptocurrencies. The public key and the private key are printed on a sheet of paper. You can keep this in a safe environment. The keys are also printed in the form of a QR code. This allows you to easily scan the codes to perform transactions in the future. A paper wallet is so secure because it gives the user full control over the coins. So you don’t have to worry about the hardware getting damaged, or hackers attacking you with malware or anything. All you have to do here is watch out for that little piece of paper.
Do I Need A Paper Wallet?
That depends on the circumstances. If you want to use coins to trade or operate a paper wallet is not the best solution. However, if you want to be there for a long time and you are not interested in using a small piece of the coins, then a Paper Wallet is one of the safest options for you.
Paper Wallet Setup
Paper Wallets are created by a program that randomly generates a private and a public key. The keys remain unique, the program they created is open source. Those with advanced coding skills can check the backend of the program to see if the results were actually generated randomly and not hacked.
We will also generate our keys offline. This removes the threat from the Internet, then we will simply uninstall the program to cover the tracks.
You can also create your Paper Wallet directly on the site, but downloading it makes it even safer.
Don’t worry if this sounds a little confusing now, it’s easier than it sounds. You do not need any knowledge of coding or cryptography. All you need is a computer, an Internet connection and something to save or write down your keys on.