Paper Wallet (Pros & Cons): Why You Should Use One and Learn How To Sweep Them
How simple it is to Create, Use, Import or "Sweep" (private keys) or "Gift Out" coins to friends.
Hello everyone.
I will be straight to the point while definitions herein will be done to explain the topic as a lay man. I will be using Electrum Wallet for "PandaCoin" to sweep, the same principle applies to wallets that support paper wallet private key importation/sweeping.
What is a Paper Wallet?
I will define a paper wallet as a temporary vault (address) for keeping your funds before transferring to a live wallet.
Ideally a Paper wallet is a document containing all of the data necessary to generate any number of any cryptocurrency's private keys, forming a wallet of keys (addresses plus private keys).
You will comprehend the above quoted definition when you visit paper wallet generating websites to generate one.
Single Wallet :
A "Single Wallet" (address) is the simplest form of a generated wallet address that doesn't require additional password or encryption but has a private key without which no one can access the funds in it, I will advise that you use this for single transaction and dispose of it afterwards or for collecting test coins or tips from faucets or to gift out coins to friends.
http://cryptodepot.org/paperwallet/pandacoin/
https://walletgenerator.net/?currency=pandacoin
Encrypted Paper Wallet
In addition to generating a single wallet address, you can generate multiple addresses simultaneously . You can also encrypt the wallets with a passphrase. Remember to keep them in a safe place. If you forget your passphrase or keys, that is the end, you have lost your funds for good.
Multiple addresses
Generated address but I deliberately selected 1
ADVANTAGE
One important advantage of Paper wallet address is that, you won't expose your main identity, transactions or address information (how rich you are).
You don't have to keep updating a live wallet's blockchain (database of transactions) of which data size could be from 10Gb and upto 120Gb or more (Bitcoin) in order to view your funds or daily transactions.
A visit to an online blockchain explorer with your paper wallet generated address will show you your balance and transactions real-time, no need to update blockchain.
Blockchain is a record/database of all transactions generated
Blockchain Explorer : It is used to view the transactions on the blockchain
Below is a link to a new and empty paper wallet generated address
https://chainz.cryptoid.info/pnd/address.dws?PQu5FNt6vWmBjCjuWZKQm2EzTMVuxavHaF
Below is a link to an old and used paper wallet generated address with history of transactions
https://chainz.cryptoid.info/pnd/address.dws?PJT4xxzmHgwrMNXHNPPhURPUq3eLpWuKEg.htm
Visit https://walletgenerator.net/ for other coin's wallet.
The Challenge
There is always a first time for everything, and the main challenge faced by almost every user is how to spend or transfer the funds in the "Paper Wallet Address" after you must have been gifted or transferred fund to it.
Kindly take note that Panda Coin takes 200 confirmations before it can be redeemed* or available for spend or sweep. This is only for cryptopia, pretty sure 6 confirms is enough most of the time.
1 - You can talk to a "trusted friend" who has a live wallet to help you sweep.
2 - You can use a lightweight wallet like Electrum https://electrum.org/ or Jaxx Wallet: https://jaxx.io/ (wallets for all coins supported) or a full scale live wallet, most times called "Core".
3 - Go to Wallet > Private Keys > Sweep
4 - Enter the "Private Key" copied, leave the newly generated wallet address by the lightweight or live wallet, then click "sweep". If your wallet is out of sync, it might take time for the sweep button to be active*.
5 - The wallet may hang for a few secs, while your cursor rotates for few seconds too.
6 - You will now see copy, save and broadcast. Choose broadcast.
7 - Your wallet will now be updated with the funds from the paper wallet, mind you a transaction fee may be deducted depending on the cryptocurrency you are dealing with.
8- You can now spend or transfer to other wallet address you wish to send to.
Thank you.
For further reading on "Paper Wallets" kindly visit https://en.bitcoin.it/wiki/Paper_wallet
Please do comment below! Should you like the post, kindly upvote and resteem!
While chatting with a friend Jommy99 on IRC, he laid emphasis on security. He spoke about losing private keys in addition to how it could easily be hacked by online injection while creating them."
He said and as mentioned earlier, although there is a slight chance of an injection happening, it would be rare, however some things can be done to make Paper wallets the most secure cold storage wallet too.
By making multiple copies of a paper wallet to keep safely in multiple safe places can help. One way to make them safer in paper format is to laminate them or store them in a sealed plastic bag even.
You can avoid an injection type hacking. by downloading the generator yourself and running it while disconnected from the internet.
Btw http://cryptodepot.org/paperwallet/pandacoin/ if you right click on the page then click save as, you can save a local copy to run from.
Finally, it is good to sweep your paper wallet asap, then if you want, send them to a new safely made Paper wallet.
Also once you've gift out or shared your "private key" with anyone, the wallet is no more safe.
I believe this will go a long way to help us all.
Thank you.