Topic: what are the disadvantages of paper wallet - page 2. (Read 570 times)

You're technically right. Though this is something I don't expect the typical person is capable of doing correctly. Most people are simply a lot better fit to use hardware wallets.

For a daily use of crypocurrency, trading and safety, will you rate electrum wallet ahead of high integrity centralised exchanges?

I wouldn't say that most people are saying to keep Bitcoin in paper wallets, especially not in last few years, since hardware wallets became more popular.
Paper wallets are usually limited to only one receiving address, and I recently saw scammers using this to trick people in Australia, so even police was warning citizens.
It's still fine to use paper wallet if you have your own printer, but for small amount of Bitcoin just use regular open source wallets, or combination with hardware wallets and signing devices.

Assuming you use your paper wallet in the correct way and sign your transaction offline, there is no need to create a new paper wallet every time you make a new transaction, unless you want to use a different change address due to privacy reasons.

Because paper wallets are considered cold storage — whereas compared to a wallet on your personal phone or computer, your funds should be totally safe from hackers assuming you created the paper wallet correctly.

In general, I'd recommend hardware wallets than paper wallets.



1. If you planned on making a transaction, you need to create a new paper wallet after the fact for security purposes.
2. Your funds can be stolen if you created the paper wallet using a malware-infected device.
3. Paper is fragile (though you can easily create multiple copies).

You can always specify your change address in electrum. To do so, you can use "pay to many" feature and add your change address as one of the receiving addresses.
Assuming I want to send 0.01 BTC to address A and the change to address B, I should fill the "Pay to" field as follows.

"!" means sending all the remaining balance to address B.
Note that you may need using coin control feature to avoid extra inputs.

I'm afraid that everyone saying the biggest disadvantage of a paper wallet is the fact that it is stored on paper are wrong. The biggest disadvantage, by far, is that most people do not set them up and use them securely, or indeed, are not even aware of how to set them up and use them securely and the many risks and pitfalls they are exposing themselves to.

I would not recommend using bitaddress or any other website to generate your paper wallet. Javascript is a very poor choice for generating private keys. It is often very buggy or poorly implemented, it is open to attack even in machines temporarily disconnected from the internet, it often draws on poor sources of entropy, and it is often untested and unverified. Simply downloading bitaddress and turning off your internet is not a secure way to generate a wallet. Similarly, most people would try to spend from such a paper wallet by simply importing it in to a hot wallet, which opens you up to all the same risks of any other hot wallet.

To properly generate a paper wallet, you need a permanently airgapped computer, formatted with a clean OS or running a live OS, running tried and tested wallet software such as Core or Electrum, connected to a dumb airgapped printer with no internal memory, and you need all of this again when it comes to importing your paper wallet to spend from it. Doing all this is both time consuming and complicated, and most people will mess up somewhere, often without even realizing it.

In short, if you dont want to trade or spend BTC but want to hodl it for like years, paper wallet is for you. On the other hand, if you dont want your BTCs to sit idle and are actively spending them, paper wallet is not for you.
You dont carry your paper wallet in a public place. You keep it in your personal locker along with all your other important files, so that you dont forget.
It returns back to the same address, paper wallets are just like any other normal wallet when imported online.

I see. I didn't know this because I haven't yet tried it. I thought importing private key in electrum will only give me the address I'll import and if I can't specify the change address, where will it be gone? Thought in that way lol. Thank you anyway.

In the case you want to spend a partial amount, the remaining balance will be lost if you make a transaction with createrawtransaction and don't specify the change address. In that case, all the remaining balance will go to the miners.
You will also lose the change if you use a wallet which generates a new address for the change and you delete the wallet after the transaction without backing up the private key of the change address.

If you create a wallet in electrum with a single private key and make a transaction, the change will be sent back to your paper wallet address and you won't lose anything.

I don't know should I call it disadvantage or a cautious- If I'm correct, when you import your paper wallet private key, you have to spend all the coins at once because if you use small amount, the change may get lost. So, first you should import the key and send all the fund at once into your another wallet. After that, you can spend small amount.

   Paper wallet are very sensitive, it can be wet, burn and many more. The most crucial things is when we are in a public place an we don't know people around us. Robbery are watching us. Some of them are hackers and Scammer's.  Unlike Bitcoin, for me it's better to use crypto than Fiat ,so I can manage easily to my phone with a good security.

Only what you need is to download the source code (ZIP) from https://github.com/pointbiz/bitaddress.org, use it on an offline browser like Firefox on an airgapped device. After you download the source code, restart your computer, open the ZIP file and use its html on the offline browser.

This is the purpose of a hardware wallet, in a way you your private key can still remain almost offline and be able to make frequent transactions.

Why Coinbase? Coinbase is a custodial wallet. I do not think any Coinbase app can even handle batch (paying to many) payment.

For online wallet, why web wallet when there are better online ones like Electrum and Bluewallet. Web wallets are the most vulnerable and non recommended wallet to use.

Aren't web wallets the worst possible option (on top of not owning key) if you are having a lot of transactions as you usually can't manually adjust the fee, meaning you will overpay?

---

Honestly I didn't hear people saying that and I got impression that people rather use hardware wallets in that case. Paper wallet is fine if you wanna store your bitcoin safely and for some reason can't or don't wanna invest in hardware wallet.

About biggest disadvantage, beside obvious one (easy to destroy/loose, not practical when you want to send bitcoin) I would also say that paper wallet is only safe if its done in a proper way and taken all precautions, and that's something that many fail at.

Even if you are going to spend your bitcoin every day, it's not recommended to use web wallets.
Most web wallets are custodial and even the most popular web wallet, blockchain.com which gives you access to your keys is still close source and vulnerable to hacks. You can use electrum for your daily transactions.

The thing with this paper wallet is it is safe from hackers.


This paper wallet is not connected to the internet so it is pretty much safe from hackers since they can't access it unless they take it from you physically.
You just need to watch out for how you generate your paper wallet since there are so many ways as wells in creating a paper wallet. Hackers could use other methods when you were just creating your wallet in order to access your paper wallet.

Also, since it is paper you need to be careful on handling it like:

Also, it is not going to be easy if you're going to have a lot of transactions, you could just use web wallets or something like coinbase when you just want to have fun and wanted to buy some cryptocurrency, I guess these paper wallets is just for people that are very careful on their investment the one that is going to buy put it in the paper wallet and forget about it.

You can use bitaddress offline, but with going offline, creating the paper wallet and going online again, you don't really increase your security.
If you want to be completely secure, you should create your wallet on an air-gapped device. This means that you should use a device which has been always offline and will be never online.

AS per my understanding, we can go offline and generate keys on Bitaddress.org. am i correct and is it Good?

What matters is that your private key(s) shouldn't connect to the internet, so your wallet is secure and protected against hackers.
Paper wallet is recommended because your keys are on a paper and there is no way for a hacker to access your paper. Take note that if you don't generate your paper wallet properly, it wouldn't provide the security it should. For example, if you generate your paper wallet using an unsafe tool, it's possible that all your fund is stolen. Or if you generate your keys on an online computer, it wouldn't be a cold storage and wouldn't have a big difference with an online wallet.

The big disadvantage is that it may not be properly setup, or the keys and addresses may not be properly generated, example are people that uses bitcoin ATM machine to generate a paper wallet, or a newbie that just use bitaddress to generate a paper wallet on the website (bitaddress.org) directly. Some people may generate a paper wallet directly on a website (online) which make it an online wallet, not offline wallet.

Paper wallet supposed to be an offline wallet, using the source code of paper wallet site like bitaddress to generate it on an airgapped devices, or using iancoleman or wallet like Electrum to generate the wallet on airgapped device.

Not only paper wallet, other wallets too. People backup their wallet seed phrase on paper, laminated paper or metallic sheet which can be stolen if not properly saved in safe locations. If you buy a hardware wallet, the backups for seed phrase are still paper, or you get yourself metallic sheets which still do not mitigate or eliminate the risk of such offline attack.

You can use BIP38 passphrase (encryption) as an additional security if generated on sites like bitaddress, or use passphrase or extended word to use a seed phrase to generate different keys and addresses on HD wallet so that only you that know the passphrase or extended word can access your coins.

The backup can be on metallic sheet, it does not necessarily mean the backup should be on paper. The backup can properly be stored on USB sticks that has no connection with online device, but having connection with only airgapped device.

It depends.

Safest wallet and method to sweep a paper wallet
Most Secure Method To Sweep Paper Wallet

As long as you can create a watch-only wallet on an online device to create unsigned transaction (PSBT) and signing it on an airgapped device and broadcasted it using the the watch-only wallet, you can use it to spend some coins or the coins on a paper wallet without connecting the seed phrase or private key online.

No. How? Why? Although, hardware wallets are good for people that do not know much about how to setup and use wallet on an airgapped device, also good for frequent transactions.