Cryptocurrencies are an exciting emerging market and Ethereum has a ton of potential. But these new currencies come with their fair share of risks. In order to keep your Ether safe, an Ethereum paper wallet can be a good place to store your Ether.
But how do you create one, is it safe and what are the risks?
In this post, I’ll show you why you might want to create a paper wallet. Then I’ll give you the exact steps on how to do it securely. I’ll also show you how to transfer your Ether in and out your newly minted paper wallet.
Remember, no storage method is 100% safe.
But if you understand the risks, take the proper precautions and diversify your storage methods, you greatly reduce your chances of losing your investment to the bad guys.
Storing your Ether on the exchanges is generally the worst place to store it because the exchanges are susceptible to hacking and the exchanges maintain control of your private keys…not you.
Therefore, cold storage is a must for anyone who is serious about keeping their money safe.
A paper wallet is one cold storage option.
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What is an Ethereum Paper Wallet?
If you are totally new to cryptocurrencies, I’ll quickly go over what a paper wallet is. If you know this already, then skip on to the next section.
First, some terminology…
Ethereum is the network or the “software” and Ether is the cryptocurrency that is used for transactions on the network. That might be a tad simplistic, but that’s pretty much all you need to know.
A wallet, digital or physical, is simply an address on the Ethereum blockchain. A blockchain is a type of database.
You can think of an Ethereum wallet address like a website domain name. It’s an address that tells you how to find a website on the internet.
So when you create a paper wallet, you are using a piece of software to do two things:
- Generate a private key, which is essentially the password to your wallet. This password allows you to spend the funds in your wallet and is very secure. Do not expose this key until you are ready to spend the money in your wallet.
- Generate a public key, which is a public address on the Ethereum blockchain. You will give this to people to send cryptocurrency to. It’s like your mailing address where people send physical mail to.
You can also send Ethereum ERC20 tokens to your Ethereum paper wallet. I’ll get into that more in a bit.
Now let’s talk about the advantages of a paper wallet…
Why Create an Ethereum Paper Wallet?
Here are some reasons why you might want to use a paper wallet to store your Ether or Ethereum-based token.
It Cannot be Hacked
Since a paper wallet is not connected to the internet, there is no way that someone can hack your paper wallet. This assumes that you have followed the correct steps in creating your paper wallet.
I’ll discuss that more, later in this guide.
Keep ERC20 Tokens Separated
If you want to separate your ERC20 tokens from your Ether holdings, then creating paper wallets is an easy way to do this. There is an added layer of protection, in that you can easily send your tokens to a paper wallet. But to transfer the token out of the wallet requires a small amount of Ether in the wallet to pay for the transaction.
This is the Ethereum “gas” or fee that is required to execute the transaction. So if there is no gas in the wallet, that is another step that someone has to go through to get the money out of the wallet.
Also, if a would-be thief does not know about ERC20 tokens, then they might only scan the wallet for Ether. If there is a zero Ether balance, then they may just leave the wallet and move on to the next one.
Keeping all of your Ether in one place is generally a bad idea. So if you can keep some of it in a bank safety deposit box, some in your safe house and some of it in a safe in your home, then you greatly reduce your risk all of your money being stolen, in the event that one of those places are compromised.
Paper wallets make it easy to do that.
Full Control of Private Keys
This is especially important with Ethereum.
Because of Airdrops.
Who knows if this will be a big thing in the future, but there are cryptocurrencies that are giving away some of their tokens to people who already own Ether.
This is called an Airdrop.
They do this because they want to raise awareness for their token. OmiseGO is an example of one of the big early Airdrops.
I don’t think that you will make a ton of money with Airdrops, but you never know. There might be a token that becomes quite valuable one day.
Here are some ERC20 tokens that I have already received in one small wallet.
The important thing to understand is that these Airdrops only go to the owners of the private keys. If you keep your money on an exchange, the exchange owns the private keys.
So the exchange will usually get the Airdropped coins, not you.
That’s even more reason to stay in control of your private keys!
You Don’t Have to Move Large Amounts of Money
Another benefit to paper wallets is that you don’t have to keep all of your money in one wallet. You can generate several wallets and spread your money out.
If you only use one cold wallet solution and have to replace it, for whatever reason, it can be scary to move all that money at once. If you mess something up, all could be gone in one fat-fingered keystroke.
Having multiple wallets means that you have the ability to only move a portion of your funds.
Of course, this also creates more work. But it can be a small price to pay for peace of mind.
Easier to Use
If you don’t like dealing with a lot of device setups and online accounts then a paper wallet can be much easier to use than a hardware wallet device. It just depends on what you prefer to use.
Just fire up your printer and print out more wallets.
Easy In-Person Transfer
If you like how cash can be transferred from person-to-person, then a paper wallet might be for you. You can just print out a paper wallet to pay for something.
Presumably this would be for a higher ticket item. People will look at you weird if you try to buy a coffee with an Ether paper wallet.
The person you are paying can just scan the paper wallet into their app, verify the transaction and you are done. If it is a fairly big translation, then you don’t have to carry around a briefcase full of cash handcuffed to your wrist.
Anyone who has watched any spy movie knows that you should target that guy.
Paper Wallet Risks
But a paper wallet is not all sunshine and roses. There are certainly risks involved with this storage method.
If you are actually printing your paper wallets on paper, with an inkjet printer, then stop right now.
Otherwise, your paper wallet is vulnerable to water, fading and any 5-year old child. In the tools section below, I’ll show you how to create a paper wallet that is much, much more durable.
But even then…fire, and a sharp pair of scissors are big threats to even the most robust paper wallets.
So be sure to store them in a safe place.
Transferring From a Paper Wallet
Putting money into a paper wallet is easy. When you want to withdraw your money from a paper wallet, you have to take an extra step and use an app or a site like MyEtherWallet to spend the money in a wallet.
You also have to “sweep” all of the money out of that wallet, for security reasons. I’ll get to that later in this guide. The money you don’t spend has to be moved to another cold storage wallet, to keep it safe.
So there are some extra steps that come with spending money from a paper wallet.
But this can also be seen as a extra layer of protection.
It’s a Bearer Bond
When you create a paper wallet, you are essentially creating a bearer bond. Whoever has possession of the paper is the owner of the money in that wallet.
Since the private key to the wallet is printed on the wallet, anyone can transfer the money out of the wallet into their account. Keep your paper wallets in your possession, hide the private key from plain view and only give them to people you absolutely trust.
You will learn how to hide the private key, later in this guide.
One way that the baddies can take your money is by creating their own websites that look like legitimate paper wallet generators. When you create a wallet on one of these sites, they can see your private keys and will have access to your funds.
They can send you a link to these bogus sites in and email or put it on a website. People think that they are going to the legit site, when they are actually going to a cloned site.
That’s why it’s so important to use the method that I outline below.
Yes, a paper wallet cannot be hacked online. But if you create the wallet with software that is hacked, then the software can potentially transmit your private keys back to a hacker. Also, if you have malware on your computer, it could track your actions and send that information to a hacker too.
I’ll talk more about how to avoid these scenarios in later sections, but just be aware that this is a threat.
The printer that you use to create your paper wallets is a potential vulnerability too. If the printer is too “smart” then it can store your previous printouts in its memory, which can be downloaded.
This guy was able to hack 150,000 printers remotely. He did it to raise awareness about printer security. But the bad guys aren’t going to be that nice.
Your documents can also be intercepted when you transmit to wireless printers. So while wireless printing is super convenient, you should not use it for printing paper wallets.
The Tools You Need to Create a Secure Paper Wallet
Here are the tools that you need to create a secure Ethereum paper wallet.
1. Synthetic Paper
Rule #1: Contrary to the name, you should not actually use paper.
One spilled beer and all of your money is toast.
If you want to store your money as securely as possible, then synthetic paper is the only real option. It is tear proof (by hand) and waterproof (if you use a laser printer).
There are a few synthetic paper options out there, but here are the two that I recommend.
The first one is Teslin. You will hear about it on many cryptocurrency forums and it is supposed to be the very best synthetic paper available.
I’m sure it’s great and all, but I personally think that’s overkill for a cryptocurrency paper wallet.
It’s also pretty expensive.
One reason is that it is so durable and costly is that it is really thick, 10 mil to be exact. For reference, the average sheet of paper is 2.5-3.5 mil thick. At a little over $1 per sheet, it is cheap, compared to other cold storage solutions. But the cost can add up.
Another option is TerraSlate. It can be about half the price of Teslin, depending on how much you buy. It comes in different thicknesses, but the 4 mil version is a good option, in my opinion.
I’ve tried to tear one sheet of TerraSlate paper with my bare hands. I’m obviously not the strongest person in the world, but I could not rip it.
These suckers are strong!
Whichever one you choose, be sure to choose the version that works with laser printers.
2. A “Dumb” Laser Printer
Rule #2: Don’t use a “fancy” or inkjet printer.
Inkjet printers use a liquid-based ink, which means that they will probably fade. Even so-called waterproof inks may not stand the test of time.
Don’t take that chance.
Laser printers on the other hand, essentially melt plastic on paper.
This is completely waterproof.
So the combination of synthetic paper and waterproof ink will give you the most durable paper wallet possible.
“Fancy” printers are also security liabilities. The signal to wireless printers can be intercepted by anyone who knows how to decode these things.
Yes, that is not highly likely, but do you really want to take that chance?
Use a hardwired USB laser printer to prevent this.
Printers with a lot of internal memory are also potential targets for thieves. This internal memory is great if a print job fails in the middle because the printer can simply reprint the job from its memory.
However, this also means that someone could possibly download your previous print job and create a duplicate of your paper wallet. Therefore, the fewer bells and whistles on your laser printer the better.
Good news! That also means that won’t have to pay a ton of money for a new printer.
Something like this printer is a good option, but do your own research before you buy.
Finally, for good measure, unplug your printer from the power and your computer, after you are done using it. This is to ensure that nobody can get access to it, online or in-person.
3. A Paper Wallet Generator
Next, you will need a paper wallet generator. This is usually done via a website.
It will generate the public and private keys for your wallet and give you a physical wallet design to print out. Some designs are cool, some not so much.
There are a few different options out there. But here’s the most important thing that you have to keep in mind.
The biggest risk with using a wallet generator is that it may transmit your private keys back to a hacker.
So you have to trust the source of the website that you use to create a paper wallet. You should also generate your wallets offline.
More on how to do that in the step-by-step guide below.
If you aren’t sure about a website, do your own research and find out what other people are using and why.
4. A QR Code Scanner For Your Computer
You will also need a QR code scanner for your desktop or laptop computer. This will make it much easier to scan the QR codes on your wallets.
Of course, this is assuming that your computer has a built-in camera. If it doesn’t, then consider getting a USB connected camera or scanning device.
If you type in the key manually and you make one mistake, all of your money could be gone. That is why it is so important to scan QR codes.
Just be sure that the QR code scanner you use does not transmit any of your scans back to a central server. This could expose your private keys by accident.
Here are few options to get you started:
5. A Copy of Linux Running From a USB Drive or Virtual Machine (Optional, But Highly Recommended)
If you want to be extra secure, then you should only create your paper wallets from a brand new installation of an operating system. Since that may not be realistic for most people to do on their main computer, the next best thing is to put a fresh copy of Linux on a USB drive and run MyEtherWallet from there.
There are several flavors of Linux out there, but Ubuntu is one of the most popular and well supported.
The complete guide on how to install Ubuntu Linux on a USB drive can be found here. It works for Windows, Ubuntu and macOS.
Once you have Linux installed on that drive, you can just plug it in and you will be able to use Linux for printing out your paper wallets.
As an alternative, you can also install a virtual machine like VMWare and install Linux on the virtual machine.
Using Linux to print your paper wallets may seem like an unnecessary step. But an ounce of prevention now, can save you from a mountain of hurt later.
This is especially true if you are running Windows, which is the least secure operating system.
I highly recommend using Linux to print paper wallets. So in this guide, I’m going to be using this method.
6. Tamper Evident Stickers (Totally Optional)
You might also want to purchase tamper-evident stickers to put on your paper wallets. This doesn’t offer any physical security, but it can make it easier to tell if someone has peeked at your private key.
Notice how the paper wallet above is folded to protect the private key. The stickers simply help to keep it hidden.
Note: the paper wallet design above is no longer available, but I will teach you how to use another design.
One of the worst things that can happen with a paper wallet is that you lock it away somewhere safe, only to discover later that there is no money in it. So if you can see that someone has tampered with the wallet beforehand, you can at least try to track down the culprit right away.
The Step-By-Step Process for Creating Your First Ethereum Paper Wallet
Now that you understand the basics about paper wallets and the tools you need to create one, it’s time to get to work. Here are the steps that you have to follow to create your first wallet.
Note: Some of these steps may seem like paranoid precautions. But remember that the Ether you store in these wallets could be worth a lot of money one day.
Step 1: Setup Linux
The first thing you have to do is to install Linux. I’m going to use a virtual machine in this example, but you can also use the USB method mentioned earlier in this guide.
Either way, get Linux installed and download the latest updates. Then make sure that you can print to your laser printer, from Linux. If you cannot print, then download the latest drivers for your printer.
Do not download anything else!
No games or any other nonsense that you have on your primary computer. The more things you have installed in Linux, the higher the probability that you will download something that can steal your Ether.
Step 2: Download the Wallet Generator
Next, you need to download the offline wallet generator from MyEtherWallet. Do this from inside Linux.
First, click on this link.
Then click on this link to download the file.
Now double click the zip file to unzip it. Once you have successfully created this folder, you are ready to move on to the next step.
Step 2: Start Printing
Before you start printing, be sure to disconnect your computer from the internet. Turn off your internet from inside Linux by unchecking the Enable Networking option from the networking menu in the upper right corner of the screen.
If you want to be extra cautious, disconnect your wireless router and turn off your modem to be absolutely sure that there is no internet traffic going to your computer. If you are using a virtual machine, shut off the internet connection on the host operating system too.
Then go into the folder you unzipped and double-click the index.html file.
This will open a browser with an offline version of the MyEtherWallet site. Since you are not connected to the internet, this site is only running locally on your computer.
This ensures that the site is not passing back any information over the internet and nobody can intercept any information that is accidently transmitted between your computer and your wireless router.
First create a password for your paper wallet. Make sure it is more than 10 characters.
Remember that password length is very important. The longer your password, the more secure it is.
Keep this password stored in a secure place, you may need it to access the money in your wallet later.
Once you have created your password, click on the Create New Wallet button.
The next screen will tell you to download a file. Click on the Download button to get the file.
This file is another way that you can use to get into this paper wallet, so keep it somewhere safe. It is an alternative to a private key, so treat it accordingly.
Once you have downloaded the file, the “I understand. Continue.” button will become clickable.
Click on it to continue to the printing phase.
The next screen will show you your private key for this wallet. Obviously, I don’t intend to actually use this wallet, so that’s why I’m showing the private key here.
Never share this private key with anyone.
You don’t have to copy this key and save it anywhere. That’s what the paper wallet is for.
Click on the Print Paper Wallet button.
Then you will be taken to a screen with the paper wallet. Print it to your laser printer and you are done.
If you want to have a backup, you can also print a copy to a PDF and store it on an encrypted USB drive. Remember however, the more copies you have floating around, the more potential for theft.
Repeat that process as many times as necessary to generate the number of paper wallets you need. Remember to keep your passwords and any other information about each wallet safe and off public servers like Dropbox or Evernote.
Also keep them organized. Make sure you know which password and keystore file goes with which wallet. You can write a number on the paper wallet and use that as a reference number in your digital files.
At this point, you probably have a question…
Why Do I Need a Password and Keystore File?
There are two ways that you can spend the money in your Ether paper wallet:
- Use the private key.
- Use the password and the keystore file together. You need both to access the funds in the wallet.
You can use either of the two options.
So if you are going to only use the paper wallet for storage, then you might not need the password and keystore file. However, they are good backups and are totally different from the private key.
If you don’t want to have paper lying around, then you could just store the password and keystore files somewhere. Presumably not in the same location. But again, the paper wallet is a good backup.
Step 3: Shut It Down
When you are done printing your paper wallets, shut down Linux and unplug your printer from the power source and your computer. Now it’s safe to connect to the internet from your primary operating system.
Step 4: Fold Up Your Paper Wallets
The biggest issue with the physical design of the MyEtherWallet paper wallet is that it does not hide the private key. Even if you don’t show your wallet to anyone, the private key could accidently be photographed or scanned.
Some camera apps automatically detect barcodes and store them, so you have to be extra careful.
Here’s how you can hide the private key with this paper wallet design.
Get ready for some origami. 🙂
When you print out your wallet, it will look like this.
You can easily fit three wallets on one sheet of paper. So after you cut out the first wallet, save the paper and use it again to print your next wallet.
First, cut out the outline of the paper wallet, like so.
Again, I’m not actually going to use this wallet, so I’m showing you the private key. But when you do this, you will want to hide the private key.
Don’t post it on Instagram 🙂
Cut off a portion of the left tab above the public key address or address. See the red line below for reference. I’ll show you why this is important in a minute.
Then cut off the “My Ether Wallet” part of the left tab. It will look like this.
Next, fold the private key on the bottom of the wallet under, so it is hidden. Make sure that the public key/address text can still be seen.
Then fold the private key QR code under, to hide it. Be sure that the entire public key address text is still visible.
Next, flip the wallet over to the back.
Fold the private key QR code in half so it is hidden.
After that, put on a sticker or piece of tape on the fold like this. The tape or sticker should not cover the public key text on the front.
Now fold the left edge to the right edge, not including the tab. It looks like this. Notice how the sticker doesn’t cover the public address.
Next, fold the tab over. The entire public key text is visible so you can double check the public address text after you scan the QR code. This is why we made that weird first cut.
Now you can use one more sticker or a piece of tape to seal the deal.
You now have a paper wallet that is easy to store and transport. Notice how it is impossible to see the complete private key QR code or text, from any side, without breaking the seals.
Since you have also covered or removed anything saying “Ether,” it’s tough to tell that it’s an Ethereum paper wallet, unless you know that the 0x prefix of the public address is an Ethereum address. If someone doesn’t know what Ether or a paper wallet are, they won’t have any reason to believe that this piece of paper is valuable.
Step 5: Buy Some Ether to Send to Your Wallet
This is the fun part. Now that you have some paper wallets, it’s time to put some Ether in them.
First, buy some Ether from a site like Coinbase. They make it easy to buy Bitcoin, Litecoin or Ethereum with a credit card or bank account.
Here’s what it would look like if you wanted to buy $100 of Ether.
After you purchase the Ether, it will be available in your Coinbase wallet.
Then use the QR scanner on your computer to get the public key from the first paper wallet you want to transfer Ether into. Make sure that the public key text on your computer matches the text on the paper wallet.
Once you have copied the public text address, go to Accounts > ETH Wallet > Send in Coinbase. Paste the paper wallet public address into Coinbase as the send address, chose how much you would like to send and hit the Continue button.
If this is your first send, you should test the process with a small send, before committing to a larger amount.
There will be one more screen to verify the transaction.
Click on Verify.
Now it’s time to check to see if the transaction went through.
Step 6: Check Your Wallet Balance
It may take some time transfer the wallet balance to your new paper wallet, but it shouldn’t take more than about 15 minutes to complete.
You can check the balance of your wallet by going to Etherscan. Use the QR Code scanner on your computer to get the public key from your paper wallet.
Remember, never use your private key until you are ready to spend the money in the wallet.
Then copy and paste the public key into the search box in the upper right corner of the Etherscan page and click on the GO button.
This will show you how much Ether is in your paper wallet. If you sent ERC20 tokens to your paper wallet, then be sure to look at the token dropdown menu.
If the transaction did not go through, check Coinbase to see the transaction status. If you cannot tell what went wrong, contact Coinbase support and they will help you out.
Step 7: Find a Secure Storage Place
Once you have confirmed that your transaction was successful, it’s time to secure your paper wallets. A bank safety deposit box is a very good option.
But you may want to store it in your home safe or a another secure location.
Your paper wallet could be worth a lot of money day, treat it like you would physical gold or a valuable antique.
Pretty simple right?
Now I’ll show you how to move your money out of your paper wallets.
How to Transfer ETH Out of a Paper Wallet
Getting money into a paper wallet is pretty easy.
So is getting it out.
Step 1: Use MyEtherWallet
There are several digital wallets that will allow you to sweet the money on your paper wallet into their wallet. But the easiest is MyEtherWallet.
To be extra safe, fire up Linux again and use the website from there. You have to be connected to the internet.
On the MyEtherWallet website, go to Send Ether & Tokens.
Then choose either Keystore/JSON File or Private Key. Using Private key is faster, so I would recommend that.
Break the seals on your paper wallet and scan the private key QR code. Copy and paste that into the box and click the unlock button.
Yes, this is done online and there is a bit of risk. However, the transaction doesn’t take long, so it is not likely that a lot can happen during that time.
But if you would like to do this super securely, then you should do an offline transaction. The instructions for how to do this can be found here.
It’s a little more complicated, but also much safer. Disconnect Linux from the internet and use that as your offline computer.
If you are going to send ERC20 tokens from your wallet, you need to have a little bit of Ether in the wallet to pay for the transactions. One wallet can hold multiple Ethereum-based cryptocurrencies.
Step 2: Sweep All of the Money From the Paper Wallet to a Digital Wallet
Now you have access to the money in your paper wallet, send it to the desktop, online or mobile wallet of your choice. Get the public address from the app you want to send the money to and put that into MyEtherWallet as the “To” address.
These wallets make it much easier to spend your money, but they are not as secure as cold storage solutions.
Here are a few options that you might want to consider:
Do some research on these solutions to see which one will work best for you. These apps give you the ability to spend your money anywhere Ether is accepted.
When you do this, take all of the money out of your paper wallet. It can no longer be considered secure because you have exposed the private key.
Step 3: Spend the Money by Using the App
Now comes the fun part. What will you buy?
Just don’t spend it all in one place 😉
Step 4: Put the Remaining Balance Back Into Cold Storage
If you have anything left over, you can send it back into a new paper wallet, or simply keep it in the digital wallet app. It just depends on how quickly you will need access to those funds again.
That is everything you need to know about creating your first Ethereum paper wallet. It can be a little tough to figure out the process the first time. But after you go through it once, you will be a pro at creating paper wallets.
If you understand and avoid the risks of paper wallets, then they can be a great way to store and transport your valuable cryptocurrency. Stay tuned for future tutorials on how to create paper wallets for other cryptocurrencies.
The process is usually similar, but some of them have their own nuances that you have to be aware of.
Still have questions? Leave them in the comments below…
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