Paper wallets are a form of cold storage (storing crypto on a device not connected to the Internet). They are pieces of paper with the following printed on them:

  • A secret private key, generally a 256-bit number, that may look something like this:E9873D79C6D87DC0FB6A5778633389F4453213303DA61F20BD67FC233AA33262 (example taken from https://en.bitcoin.it/wiki/Private_key). Alternatively, you may used a "seed phrase" which is 12 to 24 random words generated by their wallet.
  • A bitcoin address, which as a reminder is a 26-35 alphanumeric string that represents a destination for a bitcoin payment. Think of it like an email address.
  • Often a QR code for convenience to quickly pull up your bitcoin address using a smartphone to facilitate transferring.

The idea is to send crypto to that bitcoin address and store the piece of paper somewhere secure in your home, or a safe deposit box. Someone cannot access the contents unless they have the private key on that piece of paper. So you really want to make sure it's secure.

Note: Many wallet apps let you import the crypto from the paper wallet.

As you can imagine, these wallets have a lot of downsides:

  • Paper is easily damaged. People have had their paper wallets get wet and the ink blurs and makes it impossible to retrieve your crypto.
  • It encourages address reuse. Using a different address for each transaction is the most secure and private method of to send and receive crypto. Using the same one removes that benefit.
  • You can't verify yourself that your transfer succeeded. You'll need to verify this on third party blockchain websites to see that your address has received the money. Website owners can be dishonest, and websites can be hacked.
  • Private keys can be misread by users, especially for letters and numbers that look similar. Even if one character is wrong, the code won't work. QR codes also easily get damaged by water or even crinkles in paper, making it unusable.

A much better alternative are hardware wallets like the Ledger Nano, which are considered the best way to store crypto currently.