One way to keep Bitcoin even Safer, is to store it offline using a paper Bitcoin Wallet. So how is this done and why should you do it?
What is Bitcoin?
If you are new to Bitcoin, watch the video below, which explains what it is:
Unsure how to get Hold of Bitcoin? Read my other Post How to Buy and Sell Bitcoin.
What is a Paper Bitcoin Wallet?
A Paper Bitcoin Wallet is a physical document containing copies of both the Public and Private Keys which make up a wallet.
These tend to have QR Codes (Barcodes), so you can quickly scan them using a Mobile and add the keys to a software wallet to make a transaction.
Why use a Paper Bitcoin Wallet?
The main benefit of using paper bitcoin wallets, is that the Keys are not stored digitally anywhere at all. These means that your bitcoins are safe from hackers or data loss due to hardware failure etc.
The downside is that with all paper, it can degrade. For this reason, you should keep the document in a safe place away from heat or moisture.
How to Make a Paper Bitcoin Wallet
Step by step, this is how to create your own Paper Bitcoin Wallet:
- Generate a new bitcoin address over at BitAddress.org
- BitAddress will ask you to move your mouse and/or type random characters to generate the public and private keys.
- You will then have your public and private keys along with the respective QR codes, don’t scan them yet.
- Click the “Paper Wallet” tab.
- Choose how many addresses to create (one will do).
- You can choose not to print the Bitcoin artwork by ticking “Hide art?”.
- Click “Generate”
- Once generated, click “Print” and you will now print this to your Printer, or you can print to PDF and print later.
- Make a note of the Public address, or scan the Public QR Code in your bitcoin app and start depositing funds.
- Congrats! you now have stored your bitcoin on a piece of REAL paper!
How to Withdraw Bitcoin from a Paper Wallet
Okay, so now we know how to create and fund a Paper Bitcoin Wallet.
But how do you transfer the funds from the paper Wallet to another wallet?
Surprisingly – this is the hardest part. It is easy to create and fund a paper wallet, but moving the funds from it requires a bit more work.
You need to “Import” or “Sweep” your paper Wallet. This transfers your bitcoin from the paper wallet to a Live wallet. You should always sweep the ENTIRE balance of the Paper wallet as it is not safe to spend from the paper wallet directly.
Most wallets include an “Import private keys” function. One of the best software wallets I recommend is Electrum. Electrum is very fast, secure and stable.
- Get hold of another wallet such as Electrum.
- Copy the Private Key into Electrum using the Menu in Electrum “Wallet > Private keys > Import”
- Type in your Private Key from your paper wallet and press “Import”
- Now Electrum has control of your Paper wallet, but the funds are still in the paper wallet.
- Now right click on one of the receiving addresses in Electrum and click “Copy”.
- Then right click on the Imported Paper wallet address, and click “Send “From”.
- Paste the receiving address you copied in Step 5 into the “Pay” field and enter a description.
- For the amount, enter the entire value of the paper wallet, less a 0.002 BTC mining fee. You must manually work this out I’m afraid!
- Click “Send” – all done! Now you will see your whole balance (minus 0.002 BTC mining fee) in Electrum.
That’s all there is to it. If you have a lot of Bitcoin and you want to ensure it’s safety – this is the safest thing to do with it. Most online wallets are Ultra secure, as are the Software Wallets which you can run on your PC. However, nothing stored digitally is entirely free from risk or loss or theft.
Storing your Bitcoin on a paper wallet is safe, but to be even safer consider the following:
- Store the paper wallet in a plastic bag, or better yet laminate it.
- Keep it in a Safe if you have one
- Entrust it with a Solicitor
- Store a wallet in multiple locations such as deposit boxes, relatives etc.
- Use a printer which is not on a network, and print the wallet offline
That should keep your Bitcoin pretty safe. Thanks for reading, and have fun creating paper wallets!