I have precisely six nieces and two nephews. I’m pretty good at buying presents for them but this year I’ve been travelling a lot – and they’re also getting too old for me to know what they’d like. So this year, they’re all getting bitcoin.
I have been thinking about how best to do this. Most of them are too young to have smartphones. Entrusting their parents kind of ruins it. The answer is, of course, paper wallets. This is fairly simple to do, when you know how, and is a good way of getting to understand the security issues of all of the various ways of storing your bitcoin.
A bitcoin wallet consists of two ‘keys’:
A public key, which is a bit like your bank account details. You can safely give these to people so they can pay you.
A private key. You need to keep this safe because if someone gets hold of it they can spend all your bitcoin.
All the different ways of storing bitcoin – hot wallets, cold wallets, paper wallets, brain wallets etc – offer different ways of making the private key very difficult for the wrong people to get hold of and relatively easy for you to store.
The advantage of paper wallets is that they’re immune to cyber-eavesdropping and ‘man in the middle attacks’. It doesn’t matter how strong your password; if your computer is infected, it’s possible for a hacker to intercept the keystrokes when you enter it online to access a hosted wallet while paper wallets require proper old-school burglary skills to be stolen.
It’s up to you to decide which method you’re comfortable with.
However, as mentioned in other posts, we are talking about small amounts of bitcoin here and the idea is to get started, experiment, have fun and get to understand how bitcoin works. They’re only getting 0.01 BTC each!
Here’s how I did it:
Step One: Visit bitaddress.org.
If you want to be super safe, you should download the tool as a single webpage and run it offline, preferably copied onto a computer that never connects to the internet.
Step Two: Print (and laminate)
I laminated the wallets, mainly because giving a close family member a piece of paper in a ziplock bag for their birthday felt a bit cheap.
Step Three: Fund
To add some bitcoin to the wallet, scan the smaller QR code on the left and specify the amount.
(At the moment, bitcoin fees are prohibitively high for transferring small amounts. In a future post I will be experimenting with making a single transaction to multiple output addresses – using Bitcoin Core or Electrum – and seeing how much that saves in time and fees.)
Step Four: Gift
Write a heartfelt message on carefully chosen card and insert loaded paper wallet.
You can try explaining how to access the bitcoin to siblings and niblings, but they will likely glaze over or treat you with suspicion. It’s still too early.
What I hope will happen is bitcoin will continue to appreciate in value and become more mainstream, then in a couple of years’ time, when 0.01 BTC is truly worth nicking, they will be smart enough to securely sweep the bitcoin into a mobile wallet, eg breadwallet. Like this:
As will be clear from other posts, I think that bitcoin will in future be worth either:
A. a lot
So these little gifts are either going to pay for some lavish eighteenth birthday parties or make me look a bit of an idiot.