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I'm attempting to understand the workflow of sending bitcoin to a paper wallet and retrieving it. How does it works? What is the purposes of this? I don't understand if what's the meaning of this to us?

Poseidon
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Tishanie Joyce Neth Sumaya
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When you store bitcoin on an online exchange or in a software wallet, you're relying on that platform's security measures to keep your bitcoin safe. However, if that platform is hacked or compromised in some way, your bitcoin could be lost. That's where paper wallets come in. A paper wallet is a way to store your bitcoin offline, which can help reduce the risk of it being stolen. To create a paper wallet, you'll generate a unique bitcoin address and private key, which are then printed out on a piece of paper. You can then send bitcoin to that address from your software wallet or online exchange. To retrieve the bitcoin from a paper wallet, you'll need to import the private key into a software wallet . This will give you access to the bitcoin stored at that address.

Liam Concobhar
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  • To retrieve the bitcoin from a paper wallet, you'll need to import the private key into a software wallet or online exchange.

    I would say that you should NEVER import your private key to ANY online source especially an exchange. They will generally never ask you for your own private key, they generate them for you. A software wallet or even better a hardware wallet to interact with the software is a much better recommendation in general, in my opinion.

     – Poseidon Apr 03 '23 at 23:57
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    You're absolutely right. I apologize for not being clear. It's generally not recommended to import your private key into an online exchange or any other online source. Thank you for bringing this to my attention. – Liam Concobhar Apr 04 '23 at 00:00
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"Wallet" is a misleading name that unfortunately caught on, for what bitcoin private key managers are. A much more intuitive way to think about it is a keyring. Just like you can copy a physical key, you can also copy a cryptographic key. This is unlike a "wallet", which holds the currency in it.

There are many ways to generate a key. For a paper wallet, the advantage is that you generated it yourself offline, so you can be confident (if you've verified that the generating code is safe) that nobody else has access to your keys; they were never online.

Since new users may see this question, I should note a common pitfall of paper wallets; the way bitcoin transactions work means that spending any less than the total balance of the paper wallet is dangerous when you haven't prepared for the way the rest of the balance is handled. Make sure you spend the entire balance when spending from a paper wallet.

hedgedandlevered
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