We know how Bitcoins are generated and how a bitcoin transaction works, but how are bitcoins stored? We store cash in a physical wallet, and bitcoin works in a similar way, except it’s normally digital.
This guide is meant more for those with a lot of bitcoins, as in huge stashes worth a fortune (mostly early adopters), but can also be useful to starters with small stashes (even though they risk less and are far less likely to be targeted).
Bitcoin is modern equivalent of cash and, every day, another merchant starts accepting them as payment. We know how they are generated and how a bitcoin transaction works, but how are bitcoins stored? We store fiat cash in a physical wallet, and bitcoin works in a similar way, except it’s normally digital.
Bitcoin Paper Wallets
A paper wallet is a way to store Bitcoins that involves printing the Bitcoin addresses and private keys directly on a piece of paper. When done properly, paper wallets are one of the safest ways possible to store Bitcoins.
Paper Wallet Advantages
- Protection from malware and keyloggers.
- Maintain 100% ownership of your private keys. You own the coins not a 3rd party service.
- No dependence on the security of any website.
- Keeping a piece of paper safe is easier than keeping your computer secure.
Paper Wallet Disadvantages
- The paper contains everything needed to spend the coins and must be kept physically secure.