Bitcoin security has been a cause of major concern, as there have been many bitcoin wallet hacks, resulting in the loss of many thousands of bitcoins over time. This post on bitcointalk.org has an overview of all the major Bitcoin scams, thefts and compromises. Mt. Gox lost 850,000 bitcoins, and later “found” 200,000 bitcoins in an old wallet. In order to secure our wallet, we need to make a wallet which doesnt have its private keys stored on your computer, mobile device, or another internet accessible location.
Advantages of a Bitcoin Paper Wallet
A Bitcoin paper wallet, in simple terms, is a piece of paper with the private key and the public key on it. Bitcoin paper wallets have two primary benefits:
- Only you have access tot he private keys, and maintain complete control over them.
- They keys are stored offline, and thus are secure from online threats and vulnerabilities such as RATS, phishing, botnets, malware and keyloggers.
Creating Your Paper Wallet
This post will walk you through creating a bitcoin paper wallet through bitaddress.org
- First, go to bitaddress.org and generate some randomness by moving your mouse around, which leaves trails of green dots
- Once done, you will be presented with your wallet details, including the private key, the public key and the qr codes. You do not need any of these, but instead you need to click on the “paper wallet” text
- Once, you click on the “paper wallet” tab, you will be presented by a few options such as hide art, BIP 38 encryption, passphrase etc.
- BIP 38 encryption is yet another security measure for your Bitcoin paper wallet. If enabled, and if anyone steals your paper wallet, they cannot withdraw the funds unless they know the passphrase. Otherwise, if your bitcoin paper wallet is not encrypted, the person who stole it can easily withdraw the funds by just scanning the QR code. Once you select your preferences, you can print your paper wallet.
You now have your very own Bitcoin paper wallet.
How Can I Send Bitcoins to My Paper Wallet?
In order to send bitcoins to your paper wallet from your current wallet, all you need to do is scan the QR code which has the caption “Load and Verify” and send the funds. Yes, its that simple! Many other wallet programs provide the ability to scan QR codes using a phone camera or a webcam.
How Can I Send Bitcoins From My Paper Wallet?
In order to send funds from your Bitcoin paper wallet, you need to use the private key. If you are using a mobile device, you can use the Blockchain.info Android application and choose the “custom-send” option, scan your private key, and you’re good to go. However, it is recommended that you discard a paper wallet once you use it online. Their purpose, as a physical Bitcoin wallet that cannot be accessed from the internet, means that you should make a new paper wallet each time you move bitcoins out of the wallet. If you still have additional BTC that you would like to keep in storage, just transfer the remaining bitcoins to your newly generated wallet.
Of course, as this guide covered the online method of generating a paper wallet, it has already been generated online, and thus is not a true, cold storage paper wallet. We will publish a tutorial on compiling the source code, and creating a paper wallet from a computer that is not connected to the internet in the near future.