A paper wallet is a way to store cryptocurrencies offline as a physical document that contains all the data necessary to generate a large number of private keys, forming a wallet of keys. It is considered a form of “cold storage”, which means it is not connected to the internet and thus is less susceptible to online hacking attempts.
A typical paper wallet will generally include the cryptocurrency address and the private key. The private key allows you to access and control that cryptocurrency. Both pieces of information are often presented in a form that is both human-readable and can be scanned by a machine, such as a QR code.
To create a paper wallet, you use a wallet-generating software while being completely offline, generate a new wallet, and print out the credentials. Afterward, any cryptocurrency sent to that address will be accessible only by whoever has access to the physical printout (unless the private key has also been stored digitally).
Despite their security advantages, paper wallets can be risky if not handled carefully. If the paper wallet is lost, destroyed, or degraded, access to the associated cryptocurrency may be lost forever. Therefore, it’s essential to keep it in a safe place and potentially have backups. It’s also crucial to generate and print the wallet securely because if someone else has access to your private key, they also have access to your cryptocurrency.