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[[File:FirstBitcoinBills.jpg|thumb|right|200px|Casascius holding early paper ECDSA private keys]]
[[File:Water-damaged-paper-wallet.jpg|thumb|right|200px|Water damaged paper wallet]]
A '''paper ECDSA private key''' (often incorrectly referred to as a "[[paper wallet]]") is a mechanism for storing bitcoins offline as a physical document that can be secured like cash or anything else of real-world value.
They are generally created by printing a brand new ECDSA private key onto paper, usually along with a bitcoin [[address]] derived from the key, and then sending bitcoins from a wallet to that address for safekeeping.
Storing bitcoins this way is [[Paper_ECDSA_private_key#As_a_wallet|generally considered a bad idea]].


__TOC__
A '''paper wallet''' is the name given to an obsolete and unsafe method of storing bitcoin which was popular between 2011 and 2016. It works by having a single [[private key]] and bitcoin [[address]], usually generated by a website, being printed out onto paper.


==Use cases==
This method has a large number of downsides and should not be used<ref>https://www.reddit.com/r/Bitcoin/comments/670zhy/summary_pitfalls_of_paper_wallets/</ref><ref>https://www.reddit.com/r/Bitcoin/comments/5pnrjb/mentor_monday_january_23_2017_ask_all_your/dcu36a2/?context=3</ref>.


===Tips and gifts===
For storage of bitcoins, a much better way accomplish what paper wallets do is to use [[seed phrase]]s instead, where the user writes down 12 or 24 random words generated by their wallet.


By creating a keypair, one can store bitcoins on a physical medium to be left as a tip or a gift.
== Paper wallet flaws ==
The recipient then sweeps the private key to their own wallet.


===Physical tokens===
=== Printing is problematic ===


A trusted provider can hide the private key inside a tamper-resistant token, and issue them as a form of bitcoins.
Paper wallets require using a printer to transfer them to paper. Many printers have a hard drive for internal storage where the paper wallet will be saved. Anybody who reads the file will be able to see the private key and steal the stored bitcoins. Shared printers such as in schools, offices or internet cafes are also usually centrally logged. If the printer is accessed over WiFi then any radio wave listener could also obtain the private keys and steal the money.<ref>https://www.reddit.com/r/Bitcoin/comments/6ajwsv/printing_paper_wallet_at_work_office/</ref>
This requires those who accept it as payment to trust that when the provider produced the tokens, they loaded them with the correct amount of bitcoins, and that they have not been tampered with since then.
To redeem the bitcoin value, the token must be destroyed to access the private key.
Often a bitcoin address is embedded on the outside visible, but there is no guarantee (without destroying the token) that this matches the private key inside, or, even if it does, that the private key is not replicated on multiple tokens or saved by the producer.


===As a wallet===
[[Seed phrase]]s avoid this problem by having the user transfer the sensitive information to paper without a printer but via their own handwriting.


Sometimes people try to use ECDSA private keys as a wallet.
=== Promotes address reuse ===
However, a single ECDSA keypair can only produce one bitcoin [[address]].
Because of this, one is forced to choose between hazardous options:
* '''Use the key only once to receive, and only once to send the full amount.''' This requires the user to know the full amount he wants to store in advance, and often leads to the next situation:
* '''Create multiple keys.''' By using more than one key, the user can receive more than once using a different address each time, including using new addresses for change. This is very complicated, and makes it easy to accidentally reuse addresses, produce the wrong change/fee combination, lose some keys, spend hours searching for the right key, etc. Not even skilled bitcoin experts are comfortable managing their own keys manually like this.
* '''Reuse the address.''' This has severe privacy and security implications. For more information, see the article on [[address reuse]].


Since there is no safe way to use these for a wallet, it is generally considered inadvisable.
Paper wallets have just one bitcoin address, so they promote [[address reuse]]. The paper wallet creating websites generally have no warnings against this.


==Key encoding/formatting==
[[Deterministic wallet]]s and [[seed phrase]]s avoids this problem by being able to create a new bitcoin [[address]] for every incoming transaction.


[[File:BitcoinPaperWallet-sample.jpg|thumb|right|300px|Paper keypair with private key secured beneath folds]]
=== Encouragment of centralized and outsourced validation ===
[[File:PaperWallets-offlineaddress-com.png|200px|thumb|right|Paper keypair]]
An [[ECDSA]] [[private key]] can be represented in several formats, but typically the Wallet Import Format (WIF) is used, since keys represented that way are very short (51 characters) and thus easy to re-enter when importing or "sweeping" it for withdrawal.


==Creation of a paper wallet==
Despite the name, paper wallets are not actually wallets. They only store the private keys and addresses, and cannot tell users if they have actually received bitcoins and in what quantity.


===Generation of secure keys===
The single bitcoin addresses require the user to have random-access lookups of any address on the blockchain, this requirement pushes users to use centralized third-party blockchain explorer websites. This results in privacy and validation issues, the websites can spy on users and lie to them.


Care must be taken to securely generate keys since an attacker can steal stored bitcoins if it is exposed, transmitted, or generated with insufficient entropy.
A more private solution is to import the private key into bitcoin-qt and rescan. Nobody watching the bitcoin-qt full node from outside will be able to tell which address it's interested in because all the scanning happens locally on disk. Unfortunately rescanning is not scalable and so is very slow; therefore most users are pushed towards using public blockchain explorers or Electrum servers. These centralized services can spy on the user and learn exactly how many bitcoins they have and where they spend them. An address database created from all bitcoin addresses is nearly 20 GB in size at of October 2018 and takes a long time to build up, so very few people will have this kind of thing available locally for the few occasions when they redeem paper wallets. Almost all wallet software today especially smartphone wallets relies on centralized lookups when redeeming paper wallets.


Several tools exist for producing keypairs, including [[Bitcoin Address Utility]], [[vanitygen]], and [[Cwallet]].  
[[Deterministic wallet]]s and [[seed phrase]]s partly avoid this problem by having a sequence of bitcoin addresses which can be sequentially scanned. Wallets using that tech don't inherently need any extra databases and are compatible with pruning.


===Web-based key generators===
See Also: [[Full_node#Why_should_you_use_a_full_node_wallet]]


Some websites feature free open-source client-side keypair generators written in JavaScript.
=== Raw private keys are dangerous ===
Keypairs generated by JavaScript or using websites are generally considered inherently weak and insecure, and unless the code of the website is audited every time it is used, it may leak the keys to the server.
Even with careful code auditing, browser plugins or other websites may compromise the environment.


===Recommendations===
Dealing with raw private keys is very unintuative and has lead to loss of funds on a number of occasions.<ref>https://bitcoin.stackexchange.com/questions/29948/why-doc-says-importing-private-keys-is-so-dangerous</ref><ref>https://bitcoin.stackexchange.com/questions/18619/why-so-many-warnings-about-importing-private-keys</ref>. Paper wallets encourage these dangers by only having one private key and exposing it to the user.
* Keys should be produced on a computer not connected to the Internet.
* Be aware that malware often allows a remote third party to view your screen and see your keystrokes, and these can compromise the integrity of your key. Also consider that antivirus software cannot completely rule out the possibility of malware.  However, booting from a [https://en.wikipedia.org/wiki/Live_CD live disc] prevents most malware from running.
* The private keys should never be saved to a computer hard drive or sent via email or other network connections.  You should also never scan/type your key into your computer, except at the moment you are redeeming it.
* If possible, the private key should be kept hidden, for example by using BIP38 encryption, and/or by folding the paper to hide the private key so that a photograph or photocopy of it will not reveal or replicate the private key.
* A web-based generator should not be used.
* A generator should use an appropriate source of random numbers (entropy).  This means that the generated keys aren't predictable.  If the addresses come from a predictable or partially-predictable patterns like pseudorandom numbers <ref>[https://en.wikipedia.org/wiki/Pseudorandomness#Cryptography Pseudorandomness] '' is not enough for strong cryptography''</ref>, someone else who can predict the pattern can steal the balance. Randomness should NEVER be human generated, as the human brain is incapable of secure entropy.
* Remember that unlike wallets, a single ECDSA private key is only good to receive a single payment, and must be redeemed in its entirety.


===Printer Security===
One example is the mistake of destroy a paper wallet after it's imported into a [[deterministic wallet]], thinking that it has become a part of the [[deterministic wallet]] and it's safe to destroy because the master seed of the [[deterministic wallet]] has been backed up. In reality the private key is not part of the [[deterministic wallet]]. If the paper wallet (the paper) is destroyed and the app is uninstalled, the BTC is gone even if the [[deterministic wallet]] is recovered from its master seed. The unintuative behavour of raw private keys leads to this.


Some advanced printers have internal storage (even hard drives) that preserve copies of printouts. This is a risk if someone gets access to your printer, or if you dispose of your printer. There is also the possibility that a smart enough printer can be hacked. (Consider [http://en.wikipedia.org/wiki/Stuxnet StuxNet] which was able to rewrite the firmware of non-computer devices indirectly connected to the Internet) If this concerns you, use a "dumb" printer, and never let your printer have access to the Internet or to an Internet-connected computer.
Using only fully-featured wallet software is a much better because it only presents with intuative interfaces (like a GUI button to Send) which abstracts all the dangerous details away from the user.


==Redeeming Keys and Withdrawing Funds==
=== Change addresses are not handled which leads to screwups ===


ECDSA private keys are very different from wallets such as Bitcoin Core in that it is not possible to transfer (withdraw) a ''portion'' of a key's bitcoins.
Users have been known to import the private key into software wallet and then spend part of the funds. They mistakenly believe the remaining funds are still on the paper wallet when in reality they are in a [[change|change address]].<ref>https://www.reddit.com/r/Bitcoin/comments/1c9xr7/psa_using_paper_wallets_understanding_change/</ref>
The only way to withdraw funds is to import or "sweep" the ''entire'' received amount to a new address, typically a wallet or online exchange.
Once the transfer has been confirmed, ''the key should not be reused''.<ref>[http://www.reddit.com/r/Bitcoin/comments/1c9xr7/psa_using_paper_wallets_understanding_change/ reddit.com] ''Using Paper Wallets and Understanding Change''</ref>


There are various methods for copying the private key data to other wallets.
=== Encouragement of raw transactions ===
* bitcoind supports an "importprivkey" RPC method for this purpose.
 
* Bitcoin-Qt's debug console can also be used in a similar way (see also [[How to import private keys in Bitcoin Core 0.7+]]).
[[Raw Transactions]] are dangerous, unintuitive and have many times resulted in loss of funds.
* [[BlockChain.info]] and [[Armory]] can also import them directly into wallets.
 
A notable example of such a costly mistake is the address <code>1Acbo3viCYy1TSZB7m2W1nPPNF4rcAPMC9</code> which seems to have been a paper wallet. The owner appears to have been regularly buying bitcoin between April 2014 and January 2017, before apparently making a mistake with raw transactions and sending ''50 bitcoins'' as miner fees.<ref>See transaction <code>d38bd67153d774a7dab80a055cb52571aa85f6cac8f35f936c4349ca308e6380</code></ref> (worth about $50000 at the contemporary exchange rate).
 
Also note the terrible privacy due to [[Address reuse]] that allows us to get such a complete picture of what happened.
 
=== Low error correction ===
 
[[File:Water-damaged-paper-wallet-privkey.jpg|thumb|right|400px|Water damaged paper wallet [[private key]]]]
 
The private keys is typically printed in rather small font. Sometimes the characters could be mistakenly read for another letter, such as a B versus an 8 or 1 versus l. If even a single character is wrong or mistakenly typed then the entire private key will be invalid. Private keys in WIF format have a checksum but there are no tools for regular users to correct mistakes.
 
QR codes were not designed for secure storage of cryptographic material. QR codes have been damaged and made unscannable by water<ref>https://www.reddit.com/r/Bitcoin/comments/1sc02w/make_sure_to_secure_your_paperwallet_against/</ref><ref>https://www.reddit.com/r/Bitcoin/comments/2ni2fq/reminder_keep_your_paper_wallets_dry_if_you_use/</ref>, crumpling and even folding the paper.
 
As [[seed phrase]]s uses natural language words, they have far more error correction. Words written in bad handwriting can often still be read. If one or two letters are missing the word can often still be read. The [[Seed_phrase#Word_Lists|word list]] from which seed phrase words are drawn from is carefully chosen so that the first four letters of a word is enough to uniquely identify it.
 
=== Inconsistent private key format ===
 
The spending of paper wallets relies on wallet software understanding the private key format. There has been at least one situation where an update to private key formats resulted in a user's funds becoming stuck <ref>https://www.reddit.com/r/Bitcoin/comments/8v2lxa/did_i_lose_my_btc_by_sending_to_a_segwit_bc1/</ref>.
 
[[Seed phrase]]s avoid this problem because they are created by the same wallet software which understands how to spend from them.
 
=== Encouragement of obsolete brainwallet style ===
 
Almost all paper wallet websites today also have an interface to the obsolete sha256 brainwallets. These are very insecure and should never be used, yet paper wallet websites do not come with adequate warnings.
 
See also: [[Brainwallet#Obsolete_Brainwallet_Style]]
 
=== Browser wallets are bad ===
 
Almost all paper wallets are made by websites, which therefore involves most of the problems associated with [[Browser-based wallet]].<ref>https://www.reddit.com/r/Bitcoin/comments/771c4z/bitaddressorg_beware_of_possible_scam/</ref><ref>https://np.reddit.com/r/Bitcoin/comments/a7xaej/paperwallet_being_hacked/</ref><ref>https://www.reddit.com/r/Bitcoin/comments/kullxn/two_out_of_the_top_three_paper_wallet_generation/</ref>
 
== Redeeming bitcoins and withdrawing funds ==
 
[[File:FirstBitcoinBills.jpg|thumb|right|200px|Casascius holding early paper wallets]]


Note that importing a private key that may be compromised can result in the entire wallet becoming insecure.
The best way to redeem the bitcoins from a private key is to use the "sweep" feature of certain wallet software. This sends the entire balance of the paper wallet to a [[deterministic wallet]]. Alternatively the private key could be imported and the entire balance sent to an address in the wallet.
For this reason, sweeping is generally recommended over importing.


==References==
There are various wallets for doing this:
<references />


==See Also==
* [[Electrum]] and [[Mycelium]] support sweeping private keys.
* [[Bitcoin Core]] supports the RPC call "importprivkey" for this purpose. See [[How to import private keys in Bitcoin Core 0.7+]]
* [[BlockChain.info]] and [[Armory]] can also import them directly into wallets.


* [[Paper wallet]]
== Bitcoin ATMs and paper wallets ==


* [[Private key]]
Many bitcoin ATMs use a paper-wallet-like system for delivering bitcoins if the customer doesn't have a bitcoin wallet. The ATMs can print out a private key/address pair onto paper which contain the customer's bitcoins. Ideally the customer would sweep the bitcoins into their own wallet as soon as they can.


* [[Securing_your_wallet#Paper_Wallets]]
== See Also ==


* [[Private key]]
* [[Seed phrase]]
* [[Storing bitcoins]]
* [[How to import private keys]]
* [[How to import private keys]]
* https://bitzuma.com/posts/how-to-spend-a-bitcoin-paper-wallet-in-three-easy-steps/


* [https://blockchain.info/wallet/paper-tutorial Blockchain.info tutorial] on how to generate a paper wallet.
==References==
 
<references />
* [[Casascius physical bitcoins]]


[[Category:Security]]
[[Category:Security]]
[[es:Monedero de papel]]

Latest revision as of 01:08, 11 January 2021

Water damaged paper wallet

A paper wallet is the name given to an obsolete and unsafe method of storing bitcoin which was popular between 2011 and 2016. It works by having a single private key and bitcoin address, usually generated by a website, being printed out onto paper.

This method has a large number of downsides and should not be used[1][2].

For storage of bitcoins, a much better way accomplish what paper wallets do is to use seed phrases instead, where the user writes down 12 or 24 random words generated by their wallet.

Paper wallet flaws

Printing is problematic

Paper wallets require using a printer to transfer them to paper. Many printers have a hard drive for internal storage where the paper wallet will be saved. Anybody who reads the file will be able to see the private key and steal the stored bitcoins. Shared printers such as in schools, offices or internet cafes are also usually centrally logged. If the printer is accessed over WiFi then any radio wave listener could also obtain the private keys and steal the money.[3]

Seed phrases avoid this problem by having the user transfer the sensitive information to paper without a printer but via their own handwriting.

Promotes address reuse

Paper wallets have just one bitcoin address, so they promote address reuse. The paper wallet creating websites generally have no warnings against this.

Deterministic wallets and seed phrases avoids this problem by being able to create a new bitcoin address for every incoming transaction.

Encouragment of centralized and outsourced validation

Despite the name, paper wallets are not actually wallets. They only store the private keys and addresses, and cannot tell users if they have actually received bitcoins and in what quantity.

The single bitcoin addresses require the user to have random-access lookups of any address on the blockchain, this requirement pushes users to use centralized third-party blockchain explorer websites. This results in privacy and validation issues, the websites can spy on users and lie to them.

A more private solution is to import the private key into bitcoin-qt and rescan. Nobody watching the bitcoin-qt full node from outside will be able to tell which address it's interested in because all the scanning happens locally on disk. Unfortunately rescanning is not scalable and so is very slow; therefore most users are pushed towards using public blockchain explorers or Electrum servers. These centralized services can spy on the user and learn exactly how many bitcoins they have and where they spend them. An address database created from all bitcoin addresses is nearly 20 GB in size at of October 2018 and takes a long time to build up, so very few people will have this kind of thing available locally for the few occasions when they redeem paper wallets. Almost all wallet software today especially smartphone wallets relies on centralized lookups when redeeming paper wallets.

Deterministic wallets and seed phrases partly avoid this problem by having a sequence of bitcoin addresses which can be sequentially scanned. Wallets using that tech don't inherently need any extra databases and are compatible with pruning.

See Also: Full_node#Why_should_you_use_a_full_node_wallet

Raw private keys are dangerous

Dealing with raw private keys is very unintuative and has lead to loss of funds on a number of occasions.[4][5]. Paper wallets encourage these dangers by only having one private key and exposing it to the user.

One example is the mistake of destroy a paper wallet after it's imported into a deterministic wallet, thinking that it has become a part of the deterministic wallet and it's safe to destroy because the master seed of the deterministic wallet has been backed up. In reality the private key is not part of the deterministic wallet. If the paper wallet (the paper) is destroyed and the app is uninstalled, the BTC is gone even if the deterministic wallet is recovered from its master seed. The unintuative behavour of raw private keys leads to this.

Using only fully-featured wallet software is a much better because it only presents with intuative interfaces (like a GUI button to Send) which abstracts all the dangerous details away from the user.

Change addresses are not handled which leads to screwups

Users have been known to import the private key into software wallet and then spend part of the funds. They mistakenly believe the remaining funds are still on the paper wallet when in reality they are in a change address.[6]

Encouragement of raw transactions

Raw Transactions are dangerous, unintuitive and have many times resulted in loss of funds.

A notable example of such a costly mistake is the address 1Acbo3viCYy1TSZB7m2W1nPPNF4rcAPMC9 which seems to have been a paper wallet. The owner appears to have been regularly buying bitcoin between April 2014 and January 2017, before apparently making a mistake with raw transactions and sending 50 bitcoins as miner fees.[7] (worth about $50000 at the contemporary exchange rate).

Also note the terrible privacy due to Address reuse that allows us to get such a complete picture of what happened.

Low error correction

Water damaged paper wallet private key

The private keys is typically printed in rather small font. Sometimes the characters could be mistakenly read for another letter, such as a B versus an 8 or 1 versus l. If even a single character is wrong or mistakenly typed then the entire private key will be invalid. Private keys in WIF format have a checksum but there are no tools for regular users to correct mistakes.

QR codes were not designed for secure storage of cryptographic material. QR codes have been damaged and made unscannable by water[8][9], crumpling and even folding the paper.

As seed phrases uses natural language words, they have far more error correction. Words written in bad handwriting can often still be read. If one or two letters are missing the word can often still be read. The word list from which seed phrase words are drawn from is carefully chosen so that the first four letters of a word is enough to uniquely identify it.

Inconsistent private key format

The spending of paper wallets relies on wallet software understanding the private key format. There has been at least one situation where an update to private key formats resulted in a user's funds becoming stuck [10].

Seed phrases avoid this problem because they are created by the same wallet software which understands how to spend from them.

Encouragement of obsolete brainwallet style

Almost all paper wallet websites today also have an interface to the obsolete sha256 brainwallets. These are very insecure and should never be used, yet paper wallet websites do not come with adequate warnings.

See also: Brainwallet#Obsolete_Brainwallet_Style

Browser wallets are bad

Almost all paper wallets are made by websites, which therefore involves most of the problems associated with Browser-based wallet.[11][12][13]

Redeeming bitcoins and withdrawing funds

Casascius holding early paper wallets

The best way to redeem the bitcoins from a private key is to use the "sweep" feature of certain wallet software. This sends the entire balance of the paper wallet to a deterministic wallet. Alternatively the private key could be imported and the entire balance sent to an address in the wallet.

There are various wallets for doing this:

Bitcoin ATMs and paper wallets

Many bitcoin ATMs use a paper-wallet-like system for delivering bitcoins if the customer doesn't have a bitcoin wallet. The ATMs can print out a private key/address pair onto paper which contain the customer's bitcoins. Ideally the customer would sweep the bitcoins into their own wallet as soon as they can.

See Also

References

  1. ↑ https://www.reddit.com/r/Bitcoin/comments/670zhy/summary_pitfalls_of_paper_wallets/
  2. ↑ https://www.reddit.com/r/Bitcoin/comments/5pnrjb/mentor_monday_january_23_2017_ask_all_your/dcu36a2/?context=3
  3. ↑ https://www.reddit.com/r/Bitcoin/comments/6ajwsv/printing_paper_wallet_at_work_office/
  4. ↑ https://bitcoin.stackexchange.com/questions/29948/why-doc-says-importing-private-keys-is-so-dangerous
  5. ↑ https://bitcoin.stackexchange.com/questions/18619/why-so-many-warnings-about-importing-private-keys
  6. ↑ https://www.reddit.com/r/Bitcoin/comments/1c9xr7/psa_using_paper_wallets_understanding_change/
  7. ↑ See transaction d38bd67153d774a7dab80a055cb52571aa85f6cac8f35f936c4349ca308e6380
  8. ↑ https://www.reddit.com/r/Bitcoin/comments/1sc02w/make_sure_to_secure_your_paperwallet_against/
  9. ↑ https://www.reddit.com/r/Bitcoin/comments/2ni2fq/reminder_keep_your_paper_wallets_dry_if_you_use/
  10. ↑ https://www.reddit.com/r/Bitcoin/comments/8v2lxa/did_i_lose_my_btc_by_sending_to_a_segwit_bc1/
  11. ↑ https://www.reddit.com/r/Bitcoin/comments/771c4z/bitaddressorg_beware_of_possible_scam/
  12. ↑ https://np.reddit.com/r/Bitcoin/comments/a7xaej/paperwallet_being_hacked/
  13. ↑ https://www.reddit.com/r/Bitcoin/comments/kullxn/two_out_of_the_top_three_paper_wallet_generation/
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