Paper wallets: A way to prepare for physical loss while avoiding the risk of hacking
Bitcoin uses addresses to manage ownership and transactions for each coin, and since new addresses are generated for every transaction, address management is essential. The tools
used for this management are called wallets, which serve as digital purses, and there are several types. These include desktop
wallets managed on a computer screen, web wallets managed online via a service provider’s site, and dedicated wallet devices. Additionally, there is a method of printing the information on paper for storage, which is known as a paper wallet.
Desktop wallets carry the risk of data loss if your computer malfunctions or breaks down and you haven’t created a backup. While web wallets are convenient because they can be accessed from anywhere, they are vulnerable to risks such as hacking from external sources.
Paper wallets involve printing out the address and private key—either when consolidating them or each time they are generated or used for a transaction—and storing them on paper. This means the data remains intact even if the computer breaks down, and there is no risk of external hacking. On the other hand
, they are vulnerable to risks such as being lost, forgetting where they were stored, being thrown away by someone, being stolen, or being destroyed by disasters like fires or earthquakes.
