Topic: what are the disadvantages of paper wallet (Read 571 times)

I would point you towards this post from Greg Maxwell: https://bitcointalksearch.org/topic/m.56590276

Personally, I would not use a browser to generate entropy, a seed phrase, private keys, or any other valuable information, even on a permanently airgapped computer. As mentioned, Javascript implementations of these things are too weak and the attack surface is too great. When there are plenty of much more secure methods out there, such as using Core or Electrum, then I see no good reason to use a less secure method.

Could you please elaborate about the risks of entropy and JavaScript? I guess the same entropy risks apply for generating a BIP39 mnemonic in a browser, even offline?

Merci!

If you have an electronic device, which you must to be able to use bitcoin, then you can create a wallet safely.

The options are safe, cheap, easy. You can pick two.

Hardware wallets are safe and easy, but they are not cheap. Paper wallets or other cold storage is safe and cheap, but they are less easy. Hot wallets are cheap and easy, but they are less safe.

If cost is the biggest factor for you, then you can rule out hardware wallets. However, you can still use hot wallets for small amounts relatively safely by taking standard security precautions. I keep a small amount of bitcoin in a hot wallet on my phone and have done for years, topping it up whenever I spend from it. I only ever keep a small amount on my phone, but I have never once been hacked over the many years and multiple phone handsets I have used such a wallet. Hot wallets can still be relatively safe if you use them properly.

And if you want cold storage, then you can do that for free by just taking a bit of time to learn about what you are doing and how to do it. All the tools needed - Tails or some other Linux distro, Electrum, pen and paper - are either free or very cheap. The problem is that most people don't bother to learn how to do it properly, cut corners, and just fire up a random website on their usual computer and then wonder why they lost their coins.

Hardware or electronic wallets are prone to the exact same damage, as well as general degradation of their components or storage medium.

Less convenient, maybe, but generated properly a paper wallet is exponentially more secure than a hot software wallet.

One disadvantage of using a paper wallet for storing Bitcoin is that it is prone to physical damage, such as being torn, burned, or otherwise destroyed. Additionally, if the private key on the paper wallet is lost or stolen, the funds stored on the wallet will likely be unrecoverable. Additionally, paper wallets can be difficult to use for everyday transactions, as they require manual input of the private key. This could lead to mistakes, such as accidentally transferring funds to the wrong address or losing access to the funds altogether.
Overall, paper wallets are considered less convenient and less secure than other forms of Bitcoin storage, such as hardware wallets or software wallets.

How did you create those paper wallets? I doubt you created them properly.
A paper wallet should be generated on an airgapped device and the keys should never connect to the internet. Is this how you generated your paper wallets?

Just because you have your private key on a paper doesn't mean you have a paper wallet.

Strange, am I the only newbie that started her crypto journey using paper wallet? The first wallets I created for BTC and LTC are paper wallets, later when I decided to move into altcoins I still went for altcoins that uses paper wallet, Electroneum was on of those altcoin back then, I just find paper wallet to be easier to use.

If he says buying a hardware wallet is too expensive for him, replying it's easier and safer to create a wallet from a hardware wallet won't help him unfortunately. If there is no solution for poor people, it's sad and it's a big fail for Bitcoin because it was supposed to help unbanked ones IIRC, and some poor countries like Salvador want to try to use it as an official currency.

This is true only if you are using old style paper wallets in which you simply print a single key pair. If you are instead using an HD paper wallet with your seed phrase on the paper, then you can of course use that seed phrase to recover as many different cryptocurrencies as you like.

The major downside to this is that most altcoins, by nature of them being vaporware or scams, do not have good open source wallet software which can operate in an airgapped manner, meaning you risk your bitcoin by restoring the seed phrase to some seedy altcoin wallet.

Further, paper wallets are designed to store only a single currency. You can only have one private and public key to store one kind of cryptocurrency. Meaning, if you have many currencies other than Bitcoin, you need to have another paper wallets to store.

That's not how wallets work. They do not need to be activated and they do not need to be connected to a live blockchain. Any valid bitcoin address already exists and can have coins sent to it, regardless of whether or not it has actually been generated by a wallet. It is entirely possible to create a wallet which is permanently offline and is never connected to the internet in any way, which will sign transaction offline, and it is only the transaction which is broadcasted to the network.

If you think the process of setting up a hardware wallet is too complicated for newbies, then a paper wallet is a very poor alternative suggestion. It is significantly harder to generate a paper wallet in a secure manner than it is to set up a hardware wallet, and it is significantly easier to mess up when generating or using a paper wallet and end up losing all your coins.

Hard ware wallets are too expensive and the setup process can be quite tedious for newbies.
They are vulnerable to physical risk.it can be stolen or even get damaged

The reason people use paper wallet is that they do not need to worry about a piece of hardware or a piece of software failing ,all they need to take care of is a piece of paper. you can store any amount of bit coin on paper wallet, its the safest way to store your bitcoin. it is sometimes not safe to store cryptocurrencies online or in exchange. After all,they are often haked.sometimes even your live wallet on your computer has its risks.
When you own your paper wallet ,the address that holds your bit coin is not yet connected to a block chain. So your wallet is not yet active until you enter your information online and  your wallet is connected to a live block chain.

You don't have to write your recovery seed on a paper, there is nothing great about a paper wallet, all you did was write your recovery key on a piece of paper to keep the seeds offline.

Have you think about writing down your seed on a stainless steel? This makes your backup indestructible to water and fire, stronger than books and papers.

I agree with that, my mistake I mean I would rather use a non-custodial wallet like electrum than use coinbase or any web wallet when making a lot of transactions since it could easily be done on electrum and would cost less when it comes to transaction fees.



I get your point since you could have an issue when it comes to long-term, maybe there are other ways like imprinting it to metal since that's what they do most of the time but it mostly depends on how the owner takes care of it.

No, no. Aluminum has a melting point of approximately 660°C. That's well below the temperature of a candle flame, which is approximately 1,100°C.
Even burning wood reaches temperatures above 1,000°C, so your backup method is definitely not immune to fire. As o_e_l_e_o said, stainless steel is the best way to go.

Everyone suggesting to replace the paper wallet with a metal wallet is missing the point. Yes, a piece of (the right) metal is sturdier than a piece of paper, but it is neither indestructible nor immune to loss or theft. You need redundancy in your back ups - not just for bitcoin wallets, but for everything. Two pieces of paper with the same information stored on them in separate geographical locations is exponentially more secure than a single piece of metal.

There is nothing wrong with using paper as a wallet or as a back up for your seed, and indeed, many of the metal back up solutions are grossly overpriced for what they are given that you can obtain a piece of stainless steel at your local hardware store for less than 10 bucks. The safety hinges on having multiple back ups, not one.

Aluminum is definitely not immune to fire, and will melt at temperatures well below those reached in an average house fire. Stainless steel provides the best trade off between cost and durability.

Paper wallets may be simple. But if you are not careful, you’re gonna have regrets as it’s vulnerable to getting destroyed by either fire or water, especially seed phrases.

I do have a paper wallet that I have printed myself years ago. Until now, it’s still in my room and not destroyed. But I ain’t gonna make that stay for long as I wanna prefer aluminum metal that is immune to fire and water.

If the material is no longer paper and replaces it with metal, then I think the name is no longer a paper wallet.
There are still many other risks that may arise from using a paper wallet beside the ones I mentioned above.

If the goal is for long-term investment, I don't recommend using a paper wallet, as some of the disadvantages of a paper wallet have been mentioned above.

The disadvantage of the first two points can be compensated by applying information to metal, instead of paper, and then the problem of susceptibility to fire and water is eliminated. Also, if it is chasing and engraving on metal, then the problem with print fading is also eliminated. You can also apply a method such as galvanization, for example.

In general, there are various alternatives to paper that are more reliable, but require certain skills, knowledge and banal tools.

I always wanted to know how can I send the maximum amount without any confusion but never tried to learn lol. Had no idea about this. Thanks a lot man. Learned something new but easy trick.

I have used Paper wallet once in the lifetime though I didn't follow the secured method. In fact, I didn't know that wallet generating through online could be hacked. It was the beginning of my crypto exploring. I used that wallet for few months and then moved all the coins I had. After that, I have purchased HW and still using them.

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?

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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.

In case of unexpected calamities paper wallet can easily damage so you need to keep it in a well secured storage just like keeping your fiat money inorder not to erase printed characters in it. I also dont encourage new bitcoin users to use paper wallets much better to invest in amore secured and well protected hardware wallets.

Paper can be damaged by water, fire, oil and other physical damages. If you want to have better, you can use metal sheet, steel sheet to store your seeds, private keys.

Crypto security - Additional protection for your seeds / privaye keys
Metal Bitcoin seed storage stress test

Hardware wallets are best if you can have money to buy.

Bitcoins are stored on the Bitcoin Blockchain.
All wallets (Paper Wallet, Hardware wallet, etc.) are the key to accessing the Bitcoin or other crypto assets in that wallet address.

Some of the disadvantages of paper wallets e.g.
- Paper wallets are made of paper which is susceptible to fire and water.
- Prints may fade after a long time.
- It still has to be connected to another online wallet to use bitcoin.
- And what is quite crucial, the private key is usually printed as well. If someone finds it, then another person can easily take the assets.

Way more involved than that actually, to be safe ... just generating secure keys is not easy - See here https://bitcointalksearch.org/topic/advice-on-producing-key-pairs-5424717

A paper wallet requires you to keep it in a safe place that nobody else has access too. By default the most popular paper wallet generators have the private key printed on the wallet so if anybody finds it they will be able to steal your BTC. There is also a possibility that the ink will fade or the paper will deteriorate and you will lose access to your funds. Paper wallets are still a popular choice because there is no risk of getting hacked or infected with a virus.

Most are saying that if you hold big amount BTC you choose paper wallet. what is the reason behind that? and just want to know if i keep small amount BTC on paper wallet , what is the disadvantage?