A Beginner’s Guide to Bitcoin Paper Wallets
By: Ofir Beigel | Last updated: 10/23/20
A paper wallet is a general term given to a piece of paper with a private key (or seed phrase) written on it. It’s considered to be one of the best practices for keeping your private key safe. In this post I’ll explain how to create a paper wallet from scratch.
Don’t like to read? Watch our Video Guide Instead
Paper Wallet Guide Summary
Here’s the short way for creating a paper wallet:
- Go to BitAddress
- Generate a random private key
- Click “paper wallet”
- Choose how many copies you’d like to print out
- Encrypt the wallet with a BIP38 password (optional)
- Print and enjoy 🙂
That’s how to create a paper wallet in a nutshell. If you want a detailed explanation about the process and how to make sure it’s more secure keep on reading. Here’s what I’ll cover:
- What is a paper wallet?
- The simple (non secure) way to create a paper wallet
- The advanced (secure) way to create a paper wallet
- Keeping your paper wallet safe
- Frequently Asked Questions
A private key (or seed phrase) is like the password for a Bitcoin wallet. It should be kept offline in what is known as Cold Storage. A private key is a long, confusing string of random characters, while a seed phrase is a set of 24 random words that allows you to restore your private key.
Simply put, a paper wallet is a piece of paper that has your private key written on it. This makes sure that your private key is kept offline away from the hands of hackers.
Usually this process will be done for the purpose of storing large amounts of Bitcoin. It’s considered much safer than keeping coins on a hot wallet (i.e. a wallet that is connected to the internet).
When storing your Bitcoins on a paper wallet you can only load funds to the wallet. If you want to send those funds you’ll need to import or sweep the paper wallet’s private key to a software wallet in order to get access to your coins.
Here’s an example of a paper wallet:
The Bitcoin address is written on top while the private key is written on the right side
Creating a paper wallet is pretty easy, the trick is to secure it correctly. If you just want to see the process in action and don’t care that much about security you can follow this process:
- Head over to BitAddress (an open source software for producing paper wallets).
- Move your mouse around / enter random text to help generate a random private key.
- Once done, choose “Paper Wallet” and print out the results. Your Bitcoins can then be stored through the public address on the left.
- You can also add a passphrase to encrypt the paper wallet for additional protection by ticking the BIP38 encryption box.
That’s it! The process literally takes 30 seconds and you have your own paper wallet. You can generate as many addresses as you’d like by entering the amount on ‘Addresses to generate’. The addresses will all be unique and different.
Here’s the whole process in video:
Why is this considered non secure ?
First of all, since you’re connected to the web while doing this, someone may have the ability to see what’s going on on your screen.
Second, if someone was able to hack BitAddress for example, they can collect all of the private keys that people created on the site.
Last but not least, if you’re using Windows you may have been infected with Malware which you are unaware of. This may put your private key at risk as people may be monitoring your actions.
If you’re really serious about safeguarding your Bitcoins you have to make sure you create an ultra secure paper wallet. The process is a bit tedious but if we’re talking about a large amount of money, it’s worth the effort.
The necessary tools
This process is designed for PCs (a Mac tutorial will be coming soon but for now you can get the general idea). Here’s what you’ll need to download to your computer before getting started:
Ubuntu download (latest version) – The operating system we’ll use
LiLi download (latest version) – A software to install Ubuntu on our flash drive
BitAddress download – The software to create the paper wallet
You will also need a brand new (or completely formatted) flash drive.
Step 1 – Install Ubuntu on your flash drive
IMPORTANT: This step will erase everything you have on the flash drive.
- Open up LiLi and insert your flash drive.
- Make sure you’ve selected the correct drive (click refresh if drive isn’t showing).
- Choose “ISO/IMG/ZIP” and select the Ubuntu ISO file you’ve downloaded in the previous step.
- Make sure only “Format the key in FAT32” is selected.
- Click the lightning bolt to start the format and installation process
After the process is finished, unzip the BitAdrress file you’ve downloaded in the previous step and copy it into your flash drive.
Step 2 – Go offline and test the printer
At this point you should disconnect your computer from the Internet whether it has Wi-Fi or a LAN connection. Make sure there’s no way remote access can be granted to the computer. When finished, make sure you are still able to print a test page so you’ll know your printer is functional.
Step 3 – Run your computer using Ubuntu from your flash drive
Restart your computer. Clicking F12 or F1 during the boot-up process will allow you to choose to run your operating system from your flash drive (#6 in the image below).
After the Ubuntu operating system loads you will choose the “try Ubuntu” option.
Step 4 – Setup a printer on the Ubuntu operating system
At this point you will want to set up your printer on the Ubuntu OS:
- Click on System Settings (a monkey wrench and cog wheel icon)
- Click on “Printers”
- Click on “Add”
- Add your printer
- Print out a test page
Step 5 – Open BitAddress and print your new paper wallet
The final step will be to open the copy you have of BitAddress.org and create a paper wallet locally on your machine.
- Open private browsing in FireFox (right click -> “Open a New Private Window”)
- Type in the following in the address bar: file://cdrom/bitaddress.org-master/
- Click on the link “BitAddress.org.html”
- Create your paper wallet by moving the cursor around until the number on the top right reaches 100
- Choose “Paper Wallet” from the menu
- Choose how many copies you’d like to generate
- Add BIP38 encryption (optional)
- Print out your paper wallet
Why is this process considered secure?
- You’re not connected to the Internet while producing your private key.
- You’re using an “out of the box” operating system which reduced the chance for Malware.
- You are using an offline version of BitAddress so no one can hack it.
Once you have your paper wallet you can load funds to it by using the Bitcoin address on the left side. It’s important to keep the private key (on the right side) hidden and discreet.
Here are a few methods you can use to better safeguard your paper wallet:
- Get it laminated so it doesn’t tear or fade
- Keep it inside a safe or a location that only you can access
- Use a device like Cryptosteel to make it disaster proof
An advanced method includes creating several copies of the paper wallet, each holding only part of the private key or seed phrase. For example, creating three partial copies that any two of them can create the whole private key. Here’s how it should look:
This way you can leave each copy at a different location and make it harder for someone to obtain your private key if they only stole one copy.
How Do You Import a Paper Wallet into a Software Wallet?
When the time comes and you want to send Bitcoins from your paper wallet you’ll need to import the private key or seed into a software wallet. While each wallet is different in its process the general idea remains the same:
- Download a software wallet
- Click on “New Wallet”
- Import and existing seed / private key
- Scan the QR for the private key of your paper wallet (this is much easier than typing the whole key)
Important! Do not do this process on a wallet that is already holding funds as it may override the current private key. It’s best to download a new wallet / app and import for this process.
If you’re serious about Bitcoin and want to store large amounts of coins you need to get some form of cold storage. If you can spare some more, I suggest using a hardware wallet, but if you can’t afford it or want to avoid it for any other reason, a paper wallet is the way to go.
My personal advice is that if you do end up using a paper wallet, take the time to go over the secure advanced method and create an ultra secure one. The extra 30 minutes or so you’ll invest in the process may end up to prove worthwhile.
Have you had any experience with paper wallets? What’s your favorite method for creating it? I’d love to hear about it in the comment section below.