Beginners Guide on Keeping your Litecoin (LTC) Safe in a Paper Wallet for Long-Term Storage/Holding
Leaving your cryptocurrencies on an exchange instead of managing your wallets yourself is risky. If the exchange is hacked, your hard-earned LTC is gone. So it might make sense for you to keep some of your investments in a safe place, away from the exchanges, and only actively trade with parts of it. This is a guide on how to do that with LTC.
While using a hardware wallet like Trezor or Ledger is an option, we will generate a paper wallet in this guide. This is free and well-suited for long-term storage purposes. If you’d like to look more closely into different wallet types, give the bitcoin book’s chapter on the topic a read.
Going forward with creating a paper wallet, you will want to go through the whole process yourself to be sure you know how to go from creation of your paper wallet to spending your LTC stored on it. It's a quick process, but since paper wallet usage is error prone, we will play it through completely from creation to import in a software wallet.
At the end of this guide, you will have created a paper wallet, understood how it can be used for long-term storage, and know how to import it once the LTC saved on it is worth enough to spend.
Create the Paper Wallet
Use a page like https://liteaddress.org to create a combination of a public key and a private key. Those keys are all you need for storing your Litecoin. The public key is the address you (or others) can send LTC to – save it and have it easily accessible. In contrast, the private key must be kept safe and secret. If you lose it, the LTC associated with it is gone forever. If someone else gains access to it, they can access all LTC associated with it. Write both the public and the private key down on a piece of paper. This piece of paper is now essentially worth money and you should treat it accordingly.
If you want to store LTC on your paper wallet, send LTC to the public key you just created. If you want to follow along, choose a very small amount of LTC for testing and send it to your paper wallet’s public key. Use a blockchain explorer like https://live.blockcypher.com/ to wait for the transaction to complete (switch to LTC there and enter your public key). LTC is really fast, but it may still take a while, so don’t worry if your LTC isn’t showing up there immediately.
We’ve created this paper wallet without extensive security measures. If you want to look into possible security steps you can take for the paper wallet creation, read this detailed post. For the testing wallet we’re using during this guide we’re good.
You will notice that the private key you wrote down on your paper wallet is readable by anyone. A simple security step to prevent this is to write your private key down in a slightly altered way, as a crude form of obfuscation, but make sure you never forget how you’ve altered it.
Play Through Accessing & Spending
For storing purposes only, we could have stopped this guide with the last section. But since we’re making sure we can actually use the stored LTC, we’ll now go through the process of importing the paper wallet into a software wallet.
Get the official Software Wallet
Download the official software wallet and let it synchronize. It needs to be fully synchronized for your transactions to show up. You can get the software wallet at https://litecoincore.org/
Encrypt your Software Wallet
Even if you don’t plan to move LTC through your software wallet regularly, it makes sense to encrypt it: Settings -> Encrypt Wallet
Remember the password! If you use the software wallet with keys you haven’t backed up, losing the password to your encrypted software wallet is just like losing your keys.
Unlock your Software Wallet
Enter the console by going to Help -> Debug window -> Console. Unlock it, for example for 60 seconds:
walletpassphrase YOURWALLETPASSPHRASE 60
If the command succeeds without an error, you’ve successfully unlocked your wallet for the given time in seconds.
Import your Paper Wallet
Now you’ve got an unlocked wallet, you can import the private key you wrote down on your paper wallet earlier.
importprivkey PRIVATEKEY "Label for the Key"
The import will take a while. You should see the LTC you sent there earlier show up once the import is completed.
Spend Litecoin from your Software Wallet
If you want to spend your LTC, click on “Send” in your software wallet and fill out the target address and amount. Make sure to always send to another LTC address. Never send to addresses of another cryptocurrency.
Take care if you use the LTC from the wallet you’ve just imported. If you send LTC, the transaction may give you back LTC as change. Imagine handing over a 10$ bill to pay 8$ and getting back 2$ as change. Certain software wallets transfer that change to a new key, only held in the software wallet. The 2$ change will not be associated with your paper wallet. One easy way to handle this, is to leave the LTC you want to be able to access quickly in the software wallet, create a new paper wallet for long-term holding, and send the LTC you want to be saved there to it. Since this guide is for long-term holding, the effort associated with this approach should be acceptable.
You can read up on the details of transaction handling in software wallets in the bitcoinbook.
If you want to test sending LTC and you like this guide so far, feel free to send me a little tip to LMsbp1WYB13H5QvhZydL9WNbt2tKjESKCR. Don’t forget what you’ve just learnt, though. So only do this if you plan to keep using the software wallet, have only used a small testing amount of LTC, or plan to create another paper wallet with the next step.
Create Another Paper Wallet
If you’ve followed this guide then you’ve created a paper wallet, imported it into your software wallet and know how to spend your LTC. Now it’s time to create the paper wallet you actually want to use for long-term storage. Take the security precautions you deem necessary, create a new paper wallet, send LTC to it’s public key and store it in safe place. You may want to alter/obfuscate the private key slightly and/or keep a duplicate in a different physical (and fire-proof) location you consider safe.
That’s it, you should now know everything you need to keep your LTC safe for long-term storage/holding.
Traps & Pitfalls
Creating and using a paper-wallet isn’t necessarily complex once you’ve gotten your head around it, but there are a few traps & pitfalls. I’ve detailed them above, but they are highlighted again here:
- Don't skip on doing a test-run with a first paper wallet. If you’ve gone through the whole process at least once, you will minimize the risk of losing LTC due to user errors and you will feel more confident in using paper wallets.
- If you’ve imported a paper wallet’s private key into a software wallet, and sent LTC from there, remember that the change you might have gotten could be associated with a key only stored in the software wallet (see “Spending Litecoin from your Software Wallet”).
- If you send LTC, always send to another LTC address. Never send LTC to an address of another cryptocurrency.
- When you write the private key down, you might want to alter it slightly so it can be read only by you.
- You might want to keep a duplicate of your paper wallet in another physical (and fire-proof) location you consider safe.
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