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When it comes to managing the security of your digital assets, choosing the right cryptocurrency wallet is a crucial step. From hot wallets, which are accessible online at all times, to cold wallets that remain offline for added security, there are different options available.
In this post, we will dive into the world of paper wallets. Although they are considered cold wallets, Paper wallets are a controversial storage solution and have several notable setbacks when it comes to security and safety.We’ll go over exactly what a paper wallet is, share the top 3 reasons why you shouldn’t use a paper wallet, and offer the perfect alternative instead.
Table of contents
Understanding Paper Wallets
A paper wallet is exactly what it sounds like – A piece of paper on which all necessary information is printed or written.. It usually contains your public and private keys.which gives you the ability to send cryptocurrencies.
Your private keys are very sensitive. A series of words you need to access your cryptocurrency. The security of your private key is what must be protected above all else.
How it works
In general, if you have a printed paper wallet, it should have a QR code, which when scanned, links your device to your private keys, allowing you to access your funds without having to manually type them in as you would if you had a handwritten paper wallet.
When you buy or receive cryptocurrency, it is sent to your wallet, and no digital interaction is required. The sender only needs your public key, which acts like a bank account number, to send you the cryptocurrency. However, the cryptocurrency is transferred when you need access to your private keys, and to do so you need to log in to the online component of your wallet.
How safe are paper wallets?
✅Advantages
Cold storage: Its biggest advantage is that it keeps your PINs and private keys offline, which is an attractive feature for cryptocurrency investors looking for secure ways to store Bitcoin.
Cost-effective: Creating a paper wallet is very inexpensive. All you need is access to a website that generates keys, a printer, a pen, and some paper. The process can be done in just a few minutes, making it cheap and easy for non-tech savvy users.
❌Disadvantages
Material damage: By nature, paper wallets are extremely fragile, as exposure to water, fire, or general wear and tear can destroy your ability to access your funds again. If the ink fades over time, which is likely, you will be unable to access your funds.
Impossible Recovery: Other cold wallet options often come with recovery and seed phrase storage solutions. With a simple paper wallet, there is no such option or service. The private key printed or written on it is the only way to access the funds.
Unauthorized entry: One of the biggest problems with a paper wallet is that it is difficult to verify who has access to the wallet. Imagine if you used a public printer to print your wallet, there would be no way to ensure that your private keys were not stored in the printer’s memory.
If a paper wallet is not stored securely, it is at great risk. It could be stolen from your home, dropped from your pocket, or lost with other files and documents.
Not practical for quick access: This may not be the most convenient option for people who need frequent access, such as traders, as the process of obtaining codes, PINs, and accessing your funds can be lengthy.
Top 3 Reasons Why Paper Wallets Are Unsafe
1. Exposure to physical harm
As we mentioned before, these wallets are highly susceptible to damage, whether due to fire, water, sunlight, wear and tear… the list goes on.
2. Security risks
Paper wallets can be easily stolen or misplaced, just like cash or any other valuable document.
The loss rate of physical items can be high, especially for something as small and delicate as a piece of paper. Take this report from Chainalysis as a warning sign, as their research suggests that up to 23% of Bitcoin has been lost forever due to lost or forgotten keys. That’s about 3.79 million Bitcoin/$90 billion.
3. Paper wallet generator, public printers, and malware
usually, When creating a paper wallet, you need to use an online service.We know that. Anything connected to the internet is hackable.Then, regardless of whether the piece of paper is lost or stolen from your physical wallet or home, You also have a security issue if you print your wallet using a public printer.In fact, any printer is connected to the internet and networks that can keep records and store copies of printed documents. This is a potential gold mine for any hacker who can access malware on the printer and could make you a victim of Bitcoin scams and fraud.
Paper vs Hardware vs Hot Wallets
Now you might be thinking, “Great… so what’s the best option for storing cryptocurrencies?” Here’s a quick summary of each option:
Paper wallets: For anyone who is paranoid about their information being exposed online, paper wallets are appealing because they give the impression that they are the safest storage option. Yes, they are a great cold storage method, but their vulnerability makes them even more dangerous.
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Hardware wallets: They offer the perfect combination of accessibility, ease of use, and security. They are mostly cold storage, keeping your cryptocurrencies offline but can be easily connected through secure features for easy transactions.
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Hot wallets: While we never recommend keeping cryptocurrencies online, hot wallets are the perfect option for active traders who need constant online access to make instant transactions. We suggest that when you are done making trades, you transfer your cryptocurrencies directly to a cold crypto wallet immediately for safekeeping.
So what is the best option, combining all the advantages of a paper wallet, the security of a physical wallet, and the ease of access of a hot wallet?
Physical Wallets: The Solution for Storing Cryptocurrencies
Material wallets are the perfect solution.They provide the same sense of security as paper wallets, but unlike paper wallets, The material is designed to withstand any form of physical damage.Made from AISI 304L stainless steel, these wallets are fire, water and shock resistant, meaning you’ll never need to worry about them getting damaged.
As an added bonus, there is also a DIY material which is a unique way to protect your seed phrase storage. This metal plate has a carving tool to engrave your own phrases onto the card, and it is also indestructible by fire, water or tearing like paper.
Material wallets have encryption protocols that protect your data during storage and during transmission.It protects your cryptocurrencies even if the physical card is stolen or lost. It secures your funds because they are unreadable without the decryption keys.
It is easy to use and can be accessed in seconds, making it the perfect solution for both long-term investors and traders. You can place trades, check balances, and even buy Bitcoin, ETHER, and USDT from your Material wallet.
common questions
Are paper wallets the most secure?
While paper wallets are safe from online threats, they are not the most secure overall. They are vulnerable to physical damage, loss, and theft. They can also be compromised during the creation process, which can make them vulnerable before they are even used.
What is the difference between a cold wallet and a paper wallet?
Cold wallets refer to any cryptocurrency wallet that operates offline, protecting it from online hacking attacks. Paper wallets are a type of cold wallet that are made of paper, and contain printed public and private keys. Both are used to store cryptocurrencies offline, but physical cold wallets are more durable options.
What are the disadvantages of paper wallets?
They are highly vulnerable to physical damage such as water and fire, the risk of theft, and of course, the challenge of keeping them safe.
What type of wallet is the most secure?
Physical wallets, like physical wallets, are the most secure type of wallet. They offer the same offline security benefits as a paper wallet, but add layers of security, including encryption and secure PIN entry.
Can I store any cryptocurrency in a paper wallet?
Technically, paper wallets can store any cryptocurrency that allows you to set a public and private key. However, not all paper wallet generators support all cryptocurrencies or tokens, so be sure to check for compatibility.
How to get a paper wallet for cryptocurrencies?
You have to sign up for a website to create a paper wallet, then generate your keys, print them, or write them down on paper. Some go so far as to draw a QR code on paper instead of printing it out, though you run the risk of it not working and not being scannable.
