What is a Paper Wallet in Crypto?

A paper wallet is just a piece of paper where your passkeys, recovery seed phrases, or private keys are written. Paper wallets grew popular with the belief that they can help take your wallets offline, which then helps with unnecessary brute force attacks from hackers.

Definition

Paper Wallets are pieces of paper with your seed phrases written on them for easy recovery of your crypto wallet. They can help you take your private keys offline, preventing any unnecessary attacks.

These wallets can be created with just a piece of paper and a pen. However, they require safe physical storage so that no one can access your wallet.

***A Simple Paper Wallet Created by Me (Left) and a Commercially Sold QR Code Paper Wallet***

Concept

Paper Wallets were conceptualized during the initial days of crypto, where attackers would simply use spyware to steal passkeys stored in a computer. Since these passkeys were mostly present in a text file, it was easy for them to spam your email with spyware and steal them.

Paper wallets solved the issue by taking the private keys offline. Since a private key is required to sign a transaction, when the wallet is turned off (or uninstalled after creating a paper wallet) they disable the wallet. Again, when the wallet is to be used, it is reinstalled or the device is switched on. Recovery phrases then help you restore your wallets.

Another reason why Paper Wallets became popular is that, unlike hardware wallets, these were available at no cost. Anyone could grab a piece of paper and create a wallet.

Further, several sellers also sell custom-printed templates for easy use.

These wallets became available worldwide because creating them requires no permission or regulatory approval. In contrast, hardware wallets have several restrictions placed on them in many countries.

Advantages

Cheap: Paper wallets require very little to no money to create.
Easy to Use: They do not require complex setup, storage, and management like hardware wallets.
Easy to Store: Paper Wallets can be stored anywhere, such as pockets, cash wallets, diaries, books, vault, bank lockers, etc.
Faster Recovery: These wallets can be restored as soon as you can enter the pass phrase, and as long as you don’t lose the paper. Even if the paper is damaged, the user can simply write those seed phrases onto another paper.
Convenient to Carry: Unlike hardware wallets, which are prone to physical damage, a paper wallet can withstand a lot more rough handling.
No Proof of Ownership: Opposed to a hardware wallet or a mobile app wallet, paper wallets are not linked to anything you own and can give plausible ownership denial to their users.

Drawbacks

Fragile: Paper wallets are susceptible to moisture damage, spill damage, sun exposure damage, etc. Further, if you take them out with more force, they could get ripped apart.
Easy to Lose: Since it is just a piece of paper, storing it in your wallet could cause it to get lost. Anyone who finds it, can take everything in your crypto wallet.

Best Practices for Paper Wallets

Store the wallets where you can easily access them.
Avoid frequent access for the safety of your wallet and your crypto.
Write with a spill-resistant pen so that the seed phrases written on the paper do not smear it.
Avoid storing in moisture-prone areas as it may damage the paper and make it illegible to read.
Create at least 2 copies to avoid losing your crypto when one gets damaged.
Do not create multiple copies, as it would make them easy for others to steal your wallet.

Frequently Asked Questions

Which type of crypto wallet is the best?

Hardware wallets are considered the best because of their firmware design, anti-phishing features, ability to take keys offline, and several other reasons.