For many, the innovative technologies associated with the spread and popularisation of cryptocurrencies are as exciting as the trading of cryptocurrencies themselves; however, it may be surprising for some that, in the same technological ecosystem as blockchains, the use of paper was once regarded as one of the safest methods for storing one’s own cryptocurrency keys! So, this issue will delve into the brief history and usage of paper wallets!
P stands for Paper Wallets!
What Is a Paper Wallet?
Despite their name, paper wallets actually serve a completely different purpose than ordinary wallets—one that is performed in a different method and for a different medium, too. The notion that a paper wallet is not actually a wallet might be the most obvious distinction between the two.
Where a regular wallet may hold physical cash or credit cards, a paper wallet contains a public and private key pair for making crypto transactions, oftentimes being a literal piece of paper with your private and public keys printed out. These keys are often generated using a key generator application that is only known to the user of the paper wallet themselves, and then printed on paper as two strings of characters and two QR codes.
The tokens associated with these keys can only be accessible by the owner of the paper wallet after these keys have been printed and removed from the cryptocurrency network.
Being a non-custodial cold storage wallet, it is not internet-connected and enables complete self-control over the keys. In fact, the notion that you can't hack a sheet of paper is what gave paper wallets their early popularity. Many significant centralised cryptocurrency exchanges provided consumers with the option to build and print paper wallets directly from their accounts between 2010 and 2016.
Paper Wallets in 2022
However, the concept of paper wallets has largely lost favour in the bitcoin industry in recent years. In addition to the introduction of better methods of storing crypto such as deterministic methods and hardware wallets, paper wallets are also vulnerable to environmental variables, can deteriorate over time, can be lost, or can sustain various types of damage.
The printing of the wallet itself is one of the most significant security issues connected with the use of paper wallets. The computers, phones, and tablets used to print the paper can all be hacked into or corrupted with malware, ransomware, viruses, or other types of cyberattacks, even though the paper itself cannot be compromised.
Particularly with regard to memory caches, printers keep track of everything that has lately been printed. Similar to how paper jams, ink spots, or a misaligned printer head can all result in significant issues while making your paper wallet. When one's whole cryptocurrency portfolio depends on the security of a paper wallet, these security flaws might constitute a serious risk, if not a risk to the paper wallet itself.
Given that the longevity of the paper wallet should be taken into account, the type of ink used by the printer could potentially be a concern. Over time, some types of printer ink may bleed, and ink takes differently to various types of paper. If you plan to print your wallet, make sure to select a printer you are confident in, durable paper, and ink that won't bleed or fade. Otherwise, you risk losing the only way you may have to access your crypto assets and holdings.
The Bottom Line
So, should one use paper wallets to store their crypto? With as many faults as they have, paper wallets have, at this point and time, become largely obsolete as a be all and end all. The bottom line is that, with respect to paper wallets, there are simply other safer and better ways for individuals to hold their crypto. However, in a situation wherein no other storage option is available, the use of a paper wallet is still better than nothing.
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