Smart Banknotes and Paper Wallets

The term “paper wallet” or “smart banknote” refers to a physical note that resembles a conventional banknote both visually and physically, but is used in contrast as a wallet for digital currencies.

Crypto Banknote / Paper Wallet
A smart banknote or paper wallet can be used like a classic banknote; however, the owner can redeem his wallet (physical banknote) and transfer the value to a digital wallet by scanning the QR code with the private key.

How do Smart Banknotes, Cold Storage and Offline Wallets work?

A cold wallet is considered to be one of the most secure ways to store Bitcoins and other crypto assets (“coins”). The central element here is the key pair of “public key” and “private key”. Both public and private key are represented by QR codes of which the private one is sealed.

In addition to secure offline storage (cold storage), another advantage is the form of easily transferable, high-quality and durable banknotes/crypto certificates that serve as an offline medium for storing cryptocurrencies and can be used like classic banknotes. A paper wallet can also be stored in a safe or vault, similar to precious metals or cash.

Advast Suisse supports clients in the conception, creation and implementation of high quality, durable and counterfeit-proof paper wallets/crypto certificates.

For the long-term storage of cryptocurrencies such as Bitcoin or Ethereum, it is recommended not to leave the crypto assets on an exchange (trading platform) for security reasons, but to store them securely instead. True to the maxim “Not your keys, not your Bitcoins”.

Cold storage is the term used to describe the method of storing cryptocurrencies offline. This is usually done by creating key pairs. An offline wallet or paper wallet therefore contains two keys: The public key is the unique wallet address that other users in the ecosystem can use to send the cryptocurrency to the corresponding wallet. The public key is printed on the paper wallet in the form of an open QR code and is used to receive the respective cryptocurrency.

The private key, on the other hand, makes it possible to send crypto assets to third parties or to transfer the balance to another wallet or to an exchange for trading purposes, for example. The combination of these two keys is what makes a transaction of cryptocurrencies possible in the first place.

The private key can only be accessed by physically damaging the wallet. The paper wallet is then voided or empty and cannot be reused. Protection against viewing and manipulation by sealing the private key is therefore an existential challenge in the production of paper wallets.

The advantages of cold storage

The advantage of a paper wallet is that the keys are not stored digitally and therefore cannot become the target of cyberattacks or hardware failures. A stolen computer or a hard drive crash can cause the crypto assets in the wallet to be irretrievably lost. A physical paper wallet, on the other hand, can protect the user from such scenarios.

Paper wallets or crypto certificates can be issued for marketing purposes and allow easy and fast offline transactions of crypto assets even for non-experts. Paper wallets with pre-defined denominations such as 0.1 Bitcoin (BTC) or 5 Ether (ETH) are also possible. Crucially, paper wallets have the same conventional physical characteristics as conventional banknotes, which enables optical authentication, especially when there is an exchange/transfer of physical crypto certificates.

Crypto Cold Wallet Banknote with OVD

Smart Features for Smart Notes

It is in the interest of the issuers of paper wallets and crypto certificates to ensure comprehensive protection against counterfeiting and to pay special attention to the protection of the private key. Thanks to its design and properties, it should only be possible to view the private key by physically and irreversibly damaging the paper wallet.

The challenge is to keep the private key protected until the user wants to cash in or transfer the crypto assets. If someone unauthorized gets hold of the private key of a wallet, this person can withdraw or transfer the credit balance to another wallet.

To avoid counterfeiting, a high level of security is essential. The implementation of security features already starts with the design concept and key generation. Key generation can take place in a secure environment directly at the issuer of the paper wallet. The generated private keys therefore exist exclusively physically on the paper wallets and are not additionally stored digitally.

Smart banknotes or crypto certificates can be protected with physical security features such as security inks, OVDs (security holograms) and other features, where a combination of diverse security features is the optimal, most proven and most secure solution.

Advast Suisse has the know-how and the necessary experience and competently supports issuers of paper wallets and crypto certificates in the conception, creation and production of high-quality, durable and counterfeit-proof paper wallets.

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