Creating a paper cryptocurrency wallet
You now have your crypto in a wallet or on an exchange. The next step is to transfer that crypto to something you can give as a gift. You can send crypto directly to someone if they have a wallet and you know the address but this isn’t a great experience for a gift. You’d have to ask for their public key and that would ruin the surprise. Plus, it’s not very exciting or tangible.
what is a paper wallet?
I like to give crypto gifts using paper wallets. Paper wallets are a secure way of storing crypto where the information needed to access the currency is stored on a sheet of paper. The sheet of paper isn’t currency itself, but rather contains information that points to where on the blockchain the cryptocurrency is being stored. Knowing this location is having possession of the coin.
Think of the paper as a map that tells you exactly where the treasure is buried. The map is not tied to an individual and so whoever holds the map in theory has possession of the treasure. This is what makes it easy for you to transfer crypto to a paper wallet and then give it to whomever you want.
Generating the Paper Wallet
So, how do you create a paper wallet? Easy. I use a paper wallet site created by xcubicle that creates several paper wallets for different cryptocurrencies. xcubicle is a Wall Street Tech Shop with a mission to help foster the use and adoption of cryptocurrency. They built the paper wallets and made the source code available for others to build upon. The wallets include support for:
- Bitcoin
- Ethereum
- Monero
- Loki
- EOS
- Litecoin
- Ardor/Ignis
These are just a few of the cryptocurrencies out there and over time I will add gift support for more coins. If you are unsure of what to give as a gift, I’d recommend Bitcoin or maybe Ethereum. Bitcoin is the largest cryptocurrency by market cap while Ethereum is number two. In a future post, I’ll write about the difference but most recipients would be happy to receive either. If you want me to suggest just one, go with Bitcoin.
Once you have made that decision, go to the Memory Paper Wallet page created by xcubicle.
Specific instructions
Follow the instructions on the Memory Paper Wallet page. They instruct you to save the page to your computer, disconnect from the network, and then generate your wallets. This increases the security of the paper wallet and ensures that a hacker isn’t snooping on your computer where they can steal our crypto keys.
When you are generating your wallet, make sure to use your email or something related to you in the Email or Username box. For the passphrase, the more random the better. A series of eight or nine random words is the best. This ensures the private key is unique and hard for a hacking bot to guess.
Remember, the paper wallet is like a treasure map and if someone is able to get a look at it, they have directions to the treasure. If you are giving a nominal amount of money, then the risk isn’t high. In general, if you giving large amounts, it’s better to use a hardware wallet or transfer the funds in another way. We’ll provide that information in a different article.
How to Read a Paper Wallet
A paper wallet consists of two key pieces of information.
Private Key: This is the location of the treasure. The person who has the private key has access to all of the crypto at that address. You do not want to share the private key with anyone who you don’t want to have access to the cryptocurrency associated with the paper wallet. When hackers steal cryptocurrency, they are really stealing private keys. If you lose the private key, you lose any cryptocurrency associated with the wallet. So, like cash, it’s important to keep the private key from others and also not lose it.
Public Key: A public key is derived from the private key but is meant to be given to others. It is safe to give out and is what you provide others as an address to attach crypto to the wallet. When you are transferring money to the wallet, you will provide the public key.
Private and public keys are strings of numbers and letters which can be tedious and dangerous to type in by hand. If you get a character wrong, you can send crypto to a different wallet address and lose it forever. That’s why it’s recommended to use the associated QR code. Just double check after you use the QR code to ensure it has given you the correct alphanumeric string.
You now have a wallet with a private and public key. You can transfer funds to the wallet. In the next step, we’ll show you how to do that.