Bitcoin (BTC) definitely remains the most popular cryptocurrency on the market. Even though it’s the world’s first and oldest cryptocurrency, first introduced in 2009, it’s still the most desirable when it comes to investing. For instance, individuals and companies tend to diversify their financial portfolios by investing in Bitcoin.
Everyone who purchases Bitcoin assets needs to store them somewhere. Since we’re talking about a cryptocurrency, this means digital storage solutions.
There are essentially two types of digital wallets. The wallet can either be software-based, which necessitates a web connection for access, or it can be hardware-based, which exists offline. Both types are used to carry out updates to the Bitcoin blockchain ledger when you receive or send assets.
So, let’s learn more about these wallets, and take a look at how you can check the balance of your paper wallet, should you choose to get one.
Types of Bitcoin Wallets
The first type is called a hot or online wallet. The word hot refers to the wallet’s internet connection, which makes it potentially vulnerable to external attacks and hacking attempts. This type of wallet generates something called a private key, which is necessary for you to access the assets. The key is a unique set of digits and letters and it’s used to sign and send transactions. A public key, on the other hand, is the personal address of the user’s wallet and it’s used to receive payments from third parties.
While hot wallets are easy to use on computers and smartphones, the fact that they’re linked to the internet means that they carry a potential security risk. This is why it’s better to use them temporarily for storing small amounts of cryptocurrency. This wallet type is useful for holding a few coins for quick access, but it isn’t a good choice for larger sums of money.
A cold wallet is the exact opposite of a hot one. It isn’t connected to the internet, which means that the probability of it being compromised in any way is drastically lower. Moreover, your private key is also stored offline.
Users can check their assets on cold wallets through the software that is connected to their wallets. This means that a cold wallet, such as one manufactured by Ledger in the form of a specialized USB device, can be accessed using compatible software like MEW. This makes them far more secure than hot wallets and an ideal choice for storing most of your Bitcoins.
This is the most secure type of cold storage for bitcoins. A paper wallet can be explained as a sort of wallet that doesn’t need a web connection because all the necessary user access data is stored on a piece of paper.
To put it simply, it’s a piece of paper on which you print both your public key and private key. All it takes for you to carry out any desired transaction are these keys. With a smartphone capable of scanning QR codes, the funds are accessible at any time.
Are Paper Wallets Safe?
Storing bitcoins using a paper wallet is definitely safe. Since the wallet isn’t connected to the internet, the piece of paper you printed your public and the private key on is the only way to your funds, which is why it’s imperative to keep this piece of paper in a secure place, and not to share its content with anyone. If a malicious individual learns where you’re keeping your wallet and steals it, then the stored bitcoins will be compromised.
One drawback of paper wallets is that they can easily get damaged, so it’s important to keep the wallet safe from wear and tear or physical harm. For instance, if the printed QR code fades too much, the scanner might not recognize it. This means that the bitcoins stored in the wallet will become inaccessible and you won’t be able to send your funds to another Bitcoin address.
When printing the paper wallet, you should make sure that the computer and printer you’re using are reliable and safe from any malware that might store or steal your keys. In fact, the safest way to do this is to have the computer and printer disconnected from the internet while printing your paper wallet.
Private Key Encryption
If you want another layer of security, you can encrypt your paper wallet by adding a BIP38 passphrase for the keys. When it comes to Bitcoin transactions, you can use Bitcoin Core to check which blockchain is valid when transferring funds.
There is also a way for you to transfer funds from your paper wallet without exposing your private key, which gives you yet another layer of security. You have to use Electrum Bitcoin Wallet together with your paper wallet.
Checking the Balance of Your Bitcoin Paper Wallet
Now, let’s take a look at how to check the current balance of your paper wallet. For starters, you’ll need a computer or a smartphone. The remaining steps are as follows:
- First, you need to go to a blockchain explorer website such as Blockchain.info and enter your public key. Blockchain explorer sites are used as paper wallet checkers. You can enter the key manually, or you can scan the QR code of the public key.
- The block explorer will find the public address that stores your whole transaction history, along with your BTC balance. You will also see your balance in fiat currency value.
- After checking your paper wallet balance, if you want to spend some of your assets, you need to use your private key. In order to transfer BTC to another Bitcoin address, you need to enter the private key manually or scan the QR code, just like you did with the public key.
In recent years, creating Bitcoin cash paper wallets and checking their balance has become even easier. While in the past, you had to use a computer to check the balance, nowadays every Android OS smartphone can scan the QR codes of the public and private keys, similarly to a regular mobile wallet.
A Few Words Before You Go…
Paper wallets have been criticized for being complicated to use since checking the balance or transferring assets requires the physical presence of the paper on which the codes are stored. Checking your balance on hot wallets may be faster and more practical, but the security that paper wallets offer in keeping your BTC safe is what makes them worth it.