A bitcoin paper wallet is a public and private key printed on paper or a piece of plastic. It is an offline wallet and is referred to as a type of “cold storage”. This means that it is an extra-secure storage that is not connected to the Internet which can be hacked. Although its security can be debatable.
The piece of paper (or plastic) contains printed private and public keys, usually accompanied by QR code, which also serves as the address. You can simply copy and paste the keys onto a text document and print it out (making sure to delete the document from your PC). You can also use free online services that generate the printable wallet. The key generation is usually done in your browser, so they are not transmitted on the internet. But to be on the safe side, you are advised to clear your browser after printing. Keeping an image of the paper wallet on your computer or phone is a definite no-no.
Some paper wallet services offer a handy design that you can cut, fold and seal, making them a lightweight and relatively secure form of storing your bitcoins offline. You send your bitcoin to the public address displayed on the wallet, and then store the paper in a secure place.
The security of paper wallets stems from the fact that they are absolutely offline, and hackers cannot reach them. But, on the other hand, you need to keep this piece of paper secure to protect your funds.
There is a risk that somebody can find your printout and withdraw your funds without your knowledge.
As an extra precaution measure you can fold the printout covering the private key and seal the fold with a tamper evident seal.
Also, you need to bear in mind the physical vulnerability of the material. To protect the paper wallet from water (for example, in case of flooding) you may want to keep the printout in a sealed plastic bag. But there does not seem to be a good protection against fire.
But these risks are not very likely, use common sense to keep your wallets safe the way you would jewels and ordinary cash. In general paper wallets are by far the safest option to store your digital assets.
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