Paper wallets are not popular, but most people have at least heard of paper wallets. I wrote a long, boring post about it here: Paper Wallet Myths Debunked.
TL;DR - paper wallets are the safest method of storing cryptocurrencies over time, but you need to learn about it before you are a power user!
I'm defining "paper wallet" as follows:
paper wallet: private/public keypair(s) created offline, stored in non-digital form.Paper wallets are essentially an address and the corresponding private key.
Paper wallets and hardware wallets are both much more secure than any online wallet or exchange. Exchanges are risky because you have nothing more than an account balance. Same as traditional banks, but with no recourse available if it goes bad.
Online wallets are slightly better in that you do control the coins, but the private key is potentially exposed to the server and the network. So don't use these except for small amounts you are prepared to lose.
Hardware wallets are what most people use to secure their hodlings. They protect the private keys by never sharing them with any other device. They can sign transactions only - so private keys are secured by design. Paper wallets also prevent the private keys from touching any connected device.
Although there are challenges to expertly using paper wallets, when done right it provides unmatchable security. This is due to the increased level of trust you must extend to use a hardware solution.
The manufacturer requires the highest level of trust - their hardware design is itself a potential attack vector, as well as the firmware and update process. There was recently an issue involving Nano Ledger S firmware that illustrates the point.
The truth is, you'll need to trust a few more folks too. To assume your hardware wallet has not been tampered with, you need to trust the supply chain vendors, the delivery system and retailer.
I also outlined some potential "gotchas" - including sending the private key over your local network to a printer. Even using a printer directly connect to the device has some level of risk, as the key may stay resident in printer memory.
Also never, ever generate the keypair online. Don't even generate this on a machine that is connected to the Internet at all.
Another key point I make in that blog post is that you should use Shamirs Secret Sharing algorithm to break up private keys into pieces. You can require 3 out of 5 pieces to recreate the private key, for example. You could even make 2 copies of each piece.
It will take some effort to do it right, but don't be afraid to learn and try this time tested technique fro securing your cryptocurrency over time. Have fun!
Read More: https://chainwars.one/paper-wallet-myths-debunked/
Hi, great post, have followed you. What do you think of the current state of the Bitcoin market?
I think foolish money is coming pouring in just like smart money. Bitcoin will continue doing it's thing - a lot of the others not so much! Followed back, assume you're bullish?