A Bitcoin paper wallet is like a piggy bank, the low-tech device that allows you to deposit coins as many times as you like into a fairly tamper-proof sealed container.
“When you’re ready to spend those funds,” Becker colorfully explains, “you smash the piggy bank and transfer all the coins somewhere else. That’s essentially how a paper wallet works. You can add funds to a paper wallet as many times as you like. You keep it safe just as you would jewels or cash. When you want to use or transfer the funds on the paper wallet, you sweep the entire balance to a hot wallet; such as to your phone, computer, or hardware wallet. And then, you destroy the paper wallet — like smashing a piggy bank.”
Depending on whom you ask, paper wallets have different uses and even ways of being done. Some people say that paper wallets are the most secure. Others contend they can are the for privacy. Still others, like Becker, believe they’re the simplest for a non-bitcoiner to wrap their heads around.
“They are” Becker argues, “the best way to introduce people to Bitcoin for the first time.”
Sans technology, a person could give another person a paper wallet and tell them it has value just like cash. The paper wallet expert advises: “Ideally, the paper wallet itself should have printed instructions that describe what it is and how to use it.”
Becker cites gifting Bitcoin and storing Bitcoin for the long-term as other uses for Bitcoin. In the case of the latter, one can avoid “digital storage mediums or devices that can suffer a ‘bit rot’ or become obsolete.” An argument against paper wallets is similar: ink can fade, thus rendering a paper wallet useless.
Becker, unsatisfied with the amateurish paper wallet designs available on the market, set out to make paper wallets more attractive. He also wanted to make the paper wallet more secure.
“When you give a paper wallet to a Bitcoin newbie, they may not understand how important it is to keep the private key a secret,” he explains his rationale behind the focus on security.
He references one very public example of a newcomer to Bitcoin flashing his paper wallet at a TV camera. Within minutes of broadcast, the balance was swiped by a careful observer.
He continues: “Similarly, there’s a very real risk that if you keep a paper wallet in an insecure location like your office or a dorm room, that someone may sneak a picture of your paper wallet and steal the balance days or even years later.” He thinks this is important due to his belief that paper wallets represent some of the most recognizable representations of value.
“They allow us to apply some of our intuitive knowledge about ordinary money to something as virtual and difficult to understand as Bitcoin,” Becker said. “Paper wallets allow us to share bitcoins with people who do not have the technological background to understand what bitcoins are or how they should be kept safe.”
Becker’s central innovation is a ‘tri-fold’ two-sided design that hides the private key from casual exposure. Becker also sells tamper-evident stickers with serial numbers that guard the paper wallet from being opened and closed back up without detection.
But that’s not everything: “A number of well-tested safeguards are in place that prevent the paper wallet from being ‘candled’ — a process of using a bright light or laser to reveal the private key hidden behind the folds,” he elaborates.
Becker updates his website, Bitcoinpaperwallet.com. For instance, an update to the ‘guilloche pattern’ – the decorative pattern of fine lines on the face of each paper wallet – is now generated by the public key itself.
“So this means that each individual paper wallet has its own distinct look,” Becker tells. “If you have a stack of paper wallets, you can recognize which is which just by looking at the pattern. Or, if you are particular about your patterns, you can keep randomly generating new wallets until you find a guilloche pattern that appeals to you.” This could also make it more difficult for a criminal to switch out undetected your paper wallet with one of their own.”
Being careful is important when generating paper wallets. Becker said: “By using a virus-free computer, etc. – it’s even more important to have a good plan for keeping your paper wallets safe. You don’t want them to get lost, you don’t want them to get wet, etc. Physical loss or destruction of your paper wallet is much more likely to cause you grief than any sort of technological hijinks. Consider making copies of your paper wallets. Keep one copy at home and another in a safety deposit box. If you’re storing large quantities of bitcoin, be sure your living will contains instructions so that your family knows how to recover the value of your bitcoins upon your death.”