The term bitcoin is used for two different components Bitcoin protocol and bitcoin cryptocurrency. But what comes to mind most when the word bitcoin is mentioned is bitcoin the cryptocurrency.
Bitcoin cryptocurrency makes financial transaction much easier between multiple users without having to be processed by a central authority, such as financial institutions (banks) or third-party payment gateways. Though it’s called a currency, it’s not printed on paper notes like the fiat money. It’s created electronically through a mining process and held in special software called wallets.
Bitcoin is used to pay for goods and services if both parties are willing to accept it. It’s more like the traditional fiat currencies, but bitcoin transactions are made digitally.
Bitcoin paper wallets, though generated online is often referred to as offline/cold storage. As the name suggests, paper wallets are printed on paper or hardcover materials that increases its durability.
A paper wallet contains a wallet address and its private key. The key generation process is done through the clients’ web browser and is not transmitted over the internet. To be on the safe side, it’s advisable to clear your browser cookies after printing.
Paper wallets are secured because they are client side generated and the wallet addresses are entirely offline. One good thing about it is it’s not within reach of hackers. As much as you don’t generate your addresses on a phishing site, or a scam site, you rest assured that the keys generated are unknown to the third party site you generated them from and therefore making your assets secured. Though printing a paper wallet may be out of treat of cyber attackers, you still have a lot to do to secure the wallet from people around you.
Note: You should test your newly generated wallet with small amounts first before sending in large amounts.
How to spend Bitcoins on your paper wallets
With the Electrum Client, you can import your paper wallet private keys to access your funds on the associated wallet address.
- After installing the Electrum wallet successfully, click on the Wallet > Select Private Keys Option > and choose the Import option.
- The Import private keys dialogue box is displayed, enter your private key as displayed on your printed paper wallet.
- Click on the Import button to complete the importation process. A dialogue is displayed to confirm a successful import. Your bitcoins are now available to be spent.
Best ways to store paper wallets
- Laminate your paper wallets to keep them safe from being destroyed by liquid substances.
- You can also keep it safe by storing in a paper bag.
- Keep your paper wallets away from children.
- Make use of a safe deposit box to protect your wallet against theft.