April 16, 2019 – Bitcoin has value. Because it has value, you can spend it to pay for products or services, or simply save (or hold, hodl) it.
The process of spending your bitcoins might involve, among other things, keeping the coins on a web wallet that has utility services. For example, in Coins.ph, you can use your bitcoins to pay for mobile load, utility bills, credit card bills immediately. Or this can be done via payment gateways whose instructions may differ among each other.
How to Keep Your Coins Safe
The process of hodling, or keeping your bitcoins safe, however, can be a straight forward thing to do or complicated. There are various ways to keep your cryptocurrencies.
- Keep it in a mobile wallet for easy access.
- Keep them in a hardware wallet (a form of cold storage).
- Keep them in an exchange for easy trading to other coins.
- Store them in a paper wallet.
Keeping bitcoins in mobile wallets are pretty straight forward, as well as keeping them in exchanges. But there comes a risk when doing so: If you keep your coins in exchanges or “hot wallets”, you normally don’t control your private keys. The private key is the “key” that makes you have access to the bitcoins. If someone has those private keys, they can do whatever they want with the coins stored on your public address.
Keeping bitcoins in a hardware wallet such as Trezor or Bitlox are often the ultimate ways to keep your bitcoins safe, so long as you don’t lose the hardware wallet. They are, however, often expensive. Of course, if you own even just half a bitcoin or 1 bitcoin, the enormous security a hardware wallet can provide is enough guarantee and worth every money you spent on a Trezor.
The simplest way to “take bitcoins offline” is to store the keys in a bitcoin paper wallet. It’s a piece of paper where the private and public keys are printed together. That’s it. It’s a cold storage because it is essentially not on anyone’s computer, away from the Internet, making it unhackable. Your keys are with you, not in some third-party applications.
How to create a bitcoin paper wallet
- Go to a bitcoin paper wallet generator.
- Create your public and private key using the random key generator.
- Save the generated public and private keys*.
- When downloaded, this is normally in image or PDF format
- Print the output.
After that is finished, the private and public keys are displayed together and you have to save and print them out. It wouldn’t be a paper wallet if you don’t print the keys on paper.
Examples of bitcoin paper wallet generators
The above is just a simple list of generators and there are others that you can check out.
How to transfer funds to your bitcoin paper wallet from an online wallet?
If you have a web wallet, wallet on an exchange, you can simply withdraw your coins there into the paper wallet by inputting your public address (public key) to these web wallets. You can check the progress of the transaction by checking the public key on https://blockchain.info.
How to withdraw or spend bitcoins on your paper wallet?
This is normally done by “sweeping”, meaning you transfer the entire coins you have on the paper wallet into another wallet that can access the Internet, such as to web wallet.
Now, this done via “import private key” option in many wallet software such as Mycelium.
Take note that once your private key touches the Internet (which will happen once you do the import private key function), it is recommended that you not use that paper wallet address anymore and generate another one.
Also, take note that many wallets do not have the “import private key function”.
How to Keep Your Bitcoin Paper Wallets Safe
A piece of paper, although offline, is safe from hackers but not safe from, well, conditions like weathering, discoloration, water, and God forbid – fire. It is not the most durable but it still your best shot between keeping coins on a mobile wallet or purchasing a hardware wallet.
The key thing here is to keep the paper from degrading because paper is bound to get worn out over time. Lamination is one way of delaying the degradation process drastically. It is also a good idea to print multiple copies, then store them in multiple locations. While this may sound laborious and does not make any sense from someone, say, living in Manila, it is different from someone who lives in a disaster prone area. Imagine the paper wallet getting destroyed in a storm or getting lost from an earthquake.
Many opt to secure a copy of the wallet on a very private location, like a private storage.
Setting up a bitcoin paper wallet is a safe way to move your private keys offline. It also strikes the balance between using a web wallet (where you don’t own your private keys) and a hardware wallet (which is expensive). It is not recommended to keep all your coins in one paper wallet. Instead, generate more than one from the generators mentioned above. Also, remember to not put all your tokens in the paper wallet, but keep the majority of your coins on a cold storage, paper wallet or not. Remember, keeping your private bitcoin address can spell the difference between a safe wallet and not.
This article originally appeared on BitPinas: Bitcoin Paper Wallet Philippines | Cryptocurrency Paper Wallet