Thursday, January 11, 2018

More Thoughts on Paper Wallets

My last post gave a run-down of my experience in sending Bitcoin to a paper wallet, and later, using the exchange to pull money off of the paper wallet. In that, I said that I wouldn't advise using this method, even though I'll probably use them again.

My plan would be to use them for long-term storage. Even using them that way, you might lose money (if not by accident, by normal rate fluctuation). 

What I didn't tell you is how I agonized over the decision of whether to create several "sloppy wallets" and send small amounts; or just split the full amount in the wallet and send it out in two or three chunks. If the former: fees, fees, fees. If the latter... what if I made a mistake, this being my first try? (And the exchange warning me, all the while, that this process is only for advanced users). 

I had to pat myself on the back and give myself a pep talk: "After all, the world won't end if you make a mistake and lose $100 in the Twilight Zone. You won't be happy, but you won't die from it."

Honestly, though, it's a wonder I didn't die from the stress of it. When I was searching high and low for that well-hidden "Import" button on Blockchain's site, for instance, I came close to having a meltdown. I broke out in a cold sweat and had to pep-talk myself again!

But loading small amounts on paper wallets: it could still work, if you already have a nice supply of Bitcoin in some third-party wallet that only charges small fees for sending. The paper wallets could be used as gifts, or could later be combined into one big account for sending or spending.

I can't easily get over the fact that fees seem to hit you coming or going. These could increase in the future, but then again, they could stabilize, as the vendors find some compromise that would make the fees better correspond to the amounts being sent, or different fees for different uses.

In my opinion, paper wallets (with other off-line backups) would still be better than third-party vendors for storing cryptocurrency in the long term. As long as the blockchain exists, for manually inputting keys (if necessary), it seems more reliable than hoping Jaxx or Coinbase doesn't go out of business or get hacked. 

For experimenting and holding average amounts of currency, I think vendor wallets (Jaxx, Bitcoin, etc.) or exchanges (Coinbase, Blockchain, Bitsane) are most convenient. Yes, you could lose money if exchanges or wallet generators got hacked. That's not much more worrisome than a billfold full of cash and credit cards, or an on-line banking account that might get hacked one day.

P.S.: I haven't tried a hardware wallet yet. Might be trustworthy. Then again, it might be like my flash drives. At least two or three times, I've plugged in an old, reliable flash drive only to get the message that it can't be read, or the technology of that particular drive is no longer supported, or just... my machine suddenly doesn't recognize it anymore. What? Why? It worked fine yesterday... :-(

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