In theory, paper crypto wallets are the most secure method for storing crypto. They’re the ultimate representatives of cold storage, keeping your private keys in a physical form outside the fragile digital world.
However, in today’s plenitude of software and hardware solutions with sophisticated layouts, in-wallet functionalities, and unrestricted access, paper wallets appear a bit obsolete. Yet, there are quite a few users who insist on keeping their Bitcoin and other altcoins “in the pocket,” even though all of them must eventually rely on software support to access the blockchain when transacting their virtual coins.
In this article, we’ll show you that paper-wallet technology is sleek and easy to handle, and focus on the process of checking your paper-wallet balance.
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Hot vs Cold Crypto Wallets
Despite the vast variety of available storage options on the market, the main distinction between cryptocurrency wallets falls down to whether or not they require an internet connection for processing transactions.
Hot Wallets
Hot wallets cover a diverse group of software programs consisting of web or online wallets, desktop, and mobile wallets. Web wallets are usually part of the package you get when joining a centralized crypto exchange, which usually appears in the role of first-line custodian of your funds.
At first sight, this sounds really convenient — not having to transfer your funds to an external storage location — but when leaving your assets in the hands of a crypto exchange, you lose the ownership of your private keys. It’s more concerning that your keys will reside on online servers and if the exchange suffers a cyberattack, your savings will be gone too.
On the other hand, mobile and desktop wallets are free, downloadable apps that allow you to keep your private keys within the device. In terms of security, this is a step ahead of web solutions, but such mobile wallet apps also require internet access for performing basic operations.
The entire array of hot wallets features very intuitive and smooth navigation. Modern crypto wallets like Coinbase compete against each other to present fancy user interfaces and portfolio management tools, thus attracting a wider range of new users. Moreover, many hot wallets cooperate with well-established crypto exchanges to offer in-app options for direct purchases and sales for added convenience. However, none of the hot wallets can offer a reliable security set, apart from the measures that come with the browser or the device.
Cold Wallets
The first association for cold wallets are hardware wallets — physical devices containing plain software that allows for the secure storage of your digital assets. Hardware wallets keep your private key within the device, which enables them to protect your crypto holdings against any cyber scam since no hacker will be able to track the wallet devices offline.
Hardware wallets do require a desktop computer or mobile phone for connection, which can be either via a USB cable or Bluetooth, depending on how sophisticated the model is. The upside is that infected computers and software malfunction won’t impact the performance of your wallet device.
On the other hand, a paper wallet is simply a piece of paper that contains essential information for accessing and transferring your crypto holdings — a private key and a QR code. In terms of preventing unauthorized access, paper wallets are superior to hardware wallets as, despite the fact they’re offline, hardware wallets operate in digital settings whereas the paper is technically unhackable.
However, we can’t really discuss hardware vs paper wallets in “competing” terms, as paper wallets belong to a different era. They are a relic from the early Bitcoin stage, from before users were presented with the option to use portable devices that could store multiple types of coins and connect with more advanced software systems.
Unfortunately, you must pay for a hardware wallet like Ledger and Trezor while paper wallets are generated online for free.
How to Create a Bitcoin Paper Wallet?
To create a paper wallet, you’ll need to visit an open-source software for generating paper wallets and print it out. The process of creating a paper wallet is considered a one-minute job and doesn’t require specific tech skills.
However, you should know that these software generators support either one or a few cryptocurrencies. There is no such program that covers all popular coins and tokens under one roof. In fact, we can safely say that hard cold paper wallets are available only for a handful of market-dominant altcoins such as Bitcoin, Ethereum, Bitcoin Cash, Litecoin, and Dogecoin — or those that are primarily used as a store of value. Once you make sure that your desired coin can be stored on a paper wallet, search for a suitable wallet generator, and follow the instructions on the screen.
As Bitcoin is still the best-seller among thousands of other cryptocurrencies, we’ll use the simplified form of BitAddress as an example. BitAddress is a popular open-source wallet generator for Bitcoin (BTC).
- Visit bitaddress.org and hover around with your mouse or insert a random text in the empty field to help the generator create a random private key.
- When done, click on “paper wallet” and print out the result. Your bitcoins will be kept through the public address found on the left side.
- Optionally, you can add a passphrase to encrypt your wallet for added security. Just check the BIP38 encryption box. It’s as simple as that.
There are also more advanced approaches to creating a wallet for extra-security, which are far more time-consuming and demand special software tools and a brand new flash drive. However, you can fully rely on the simple one we just discussed, unless dealing with enormously large amounts of Bitcoin.
How to Check My Paper Wallet Balance?
Let’s move to the point now. When deciding to keep your crypto exclusively in a paper wallet, you can only load funds. To send or trade cryptocurrencies, you’ll still need a dynamic software system to access your funds.
Similarly, your paper wallet itself can’t show you its balance and other relevant information about your cryptocurrency. If you want to see the balance and the current exchange rate, you’ll have to turn to a certain blockchain explorer service. As implied above, paper-wallet services cover only one or a few types of cryptocurrencies as opposed to multi-cryptocurrency software and hardware wallets where you can store thousands of coins at the same time. Accordingly, the first step for checking your paper-wallet balance will be to:
Choose a Service to Use
Just go through the list below and find a suitable explorer based on the type of crypto in your paper wallet:
- Bitcoin: Blockchain.com (formerly known as Blockchain.info), BlockCypher, and BTC.com;
- Ethereum: Blockchain.com, Etherscan (shows the ETH value in USD), eth.btc.com (shows the ETH value in USD);
- Litecoin: BlockCypher;
- Bitcoin Cash: Blockchain.com and bch.btc.com;
- DogeCoin: BlockCypher;
Track Down Your public key
Now that you’ve chosen an appropriate block explorer, you’ll have to insert your public key as required (see below). It’s the first stage to retrieving your balance, transaction history, and the current value of the asset in fiat currency.
If you’re wondering whether exposing your public keys is safe, the answer is yes. We use them as an address for senders to find us. It’s the private key you should keep with the highest discretion and use only when you transfer the assets from your paper wallet to another destination.
Scan the QR code or Copy the Public Key Into a Clock Explorer
Paper wallets usually come with a QR code of your public keys or paper-wallet address that can be scanned or you can try manually inserting the address into the selected field on the block explorer platform.
Bookmark the explorer
To make things easier, you could simply bookmark the explorer to avoid searching for the address every time you check your current balance. You can also rely on a mobile app such as CoinTracker (available for iOS and Android devices), which is a nice way of having a clear view of your total balance without inserting the private keys.
Do I Need a Cryptocurrency Paper Wallet?
The most loyal paper-wallet audience are traditional traders who entered the game before it went mainstream, but also holders of large amounts of Bitcoin and other dominant coins. So, the answer depends on your personal trading style and purpose for joining blockchain technology.
If you’re an active day trader, you’ll need a more practical solution than paper to access your funds on a regular basis. The same applies if you’re planning to use your cryptocurrencies as a means of payment at crypto-friendly retailers or if you’re well-prepared to start accepting crypto settlements for your business.
However, if you aren’t thinking of having an active trading life and want to make a one-off investment, then “burying” your coins in a tangible object is quite a reasonable decision.
Finally, don’t even try to generate a physical copy of your private keys unless you can ensure a perfectly safe environment for your paper wallet.
A Few Words Before You Go…
The best part of the development of the crypto storage industry is that now, we have a chance to combine security and convenience. However, it seems that the more opportunities we have, the less concerned we are about the importance of safe storage. New users focus on the methods for buying Bitcoin and other cryptocurrencies and once they overcome the initial obstacles to payment, conversions, and trading fees, users just leave their newly-purchased coins on the very exchange.
The first crypto lesson is that the storage factor should be settled before the purchase itself. As rough as it may sound, you need to provide your crypto holdings with offline shelter before learning the hard way how much free virtual space can cost you.