What is a Paper Wallet?
A paper wallet is a physical document that contains your Bitcoin private and public keys. It serves as a secure way to store cryptocurrency offline, making it less vulnerable to hacking and online theft.
How Does It Work?
When you create a paper wallet, you generate a new Bitcoin address along with a private key. These keys are printed on a piece of paper, often in the form of QR codes, which can be scanned or entered manually for transactions.
Advantages of Paper Wallets
- Security: Being offline, paper wallets are immune to online attacks.
- Cost-effective: They can be created for free without the need for third-party services.
- Ownership: You have full control over your private keys, eliminating reliance on exchanges.
Disadvantages of Paper Wallets
- Physical Damage: If the paper is lost or damaged, you may lose access to your funds.
- Not User-friendly: Managing paper wallets can be complex for beginners.
Best Practices
To ensure the safety of your paper wallet, always generate it in a secure, offline environment and keep multiple copies in safe locations.