A paper wallet is a physical document that contains a public address for receiving cryptocurrencies and a private key, which allows you to access and manage those funds. Unlike digital wallets, paper wallets are entirely offline, making them a form of cold storage. This offline nature provides a high level of security against hacking, malware, and other online threats.

To create a paper wallet, users typically generate a new wallet address and private key using a trusted online tool or software that can run offline. Once generated, these keys are printed out, often as a QR code, to facilitate easy scanning. The printed document should then be stored in a secure location, such as a safe or a safety deposit box, to prevent loss, theft, or damage.

Using a paper wallet involves transferring cryptocurrencies to the public address printed on the paper. To access or spend the funds, you would need to import the private key into a software wallet, which can then interact with the blockchain.

While paper wallets offer robust security against digital threats, they are not without risks. Physical damage, loss, or theft of the paper can result in the permanent loss of funds. Therefore, users should take precautions, such as creating multiple copies and storing them in different secure locations. Properly managing a paper wallet can be a highly secure way to store cryptocurrencies for long-term holding.