Physical Bitcoin Wallets

Bitcoin is a digital asset, which only exists on the blockchain, which makes it hard for people to understand its real-world application. As humans, we can quickly understand something we can see and touch, like cash.

While Bitcoin cannot be migrated into the physical world, the way cash is, it can have physical representations that hold access to Bitcoin on the blockchain. 

How a physical wallet works

A physical Bitcoin wallet sets up a private key the same way you would with a non-custodial hot wallet or cold wallet. Hot wallets store the keys live on the device, while cold wallets do not; in the case of a physical wallet, you are storing the keys on a physical means; this could be as simple as a piece of paper or a more robust solution like a throwaway flash drive. 

Physical Bitcoin Wallets

Physical Bitcoin wallets are often categorised alongside hardware wallets used for cold storage for long term HODLers. However, there are methods of securing Bitcoin to be used for trading in the physical world with instant cash finality.

Using a physical wallet, you can actually hand over ownership of a Bitcoin wallet holding a certain value and settle a transaction in real life, in real-time. You do not need the blockchain to verify this transaction as you are merely handing over the keys and, therefore, the owner of this wallet. 

  • Physical wallet transfers naturally save you money as you do not need to pay mining fees on the main chain or routing fees on a secondary chain like Lightning. 
  • Physical wallets can settle immediately without the need for an internet connection or any devices that could be compromised.
  • Physical wallets allow you to acquire and trade without the need for KYC and AML as you are performing a peer to peer transaction. 

Physical Bitcoin does have its limitations since they are not the easiest wallets to work with and set up. Physical wallets are known to be a little more confusing and complicated than other wallets.

They can be harder to set up, and if the paper is lost and a backup copy hasn’t been produced, there is no way of restoring your access to your Bitcoin.

Paper wallets also have security issues like exposing your keys to a computer or device like a printer that can be compromised and the information intercepted. 

There are also trust issues involved, as you do not know if the counterparty has a copy of the keys, which they can use to spend the Bitcoin. 

Paper wallets are the most simple implementation of a physical wallet but there are also other physical options that provide added security and make other trade-offs, such as credit sticks and key cards.

Physical Bitcoin wallet options

Share with a friend

If you thought this information was helpful why not share it on your favourite social media network and encourage others to learn more about Bitcoin

The latest news from our blog

why bitcoin mining operations fail
Che Kohler

Why Bitcoin Miners Fail

The bitcoin mining business is not a get-rich-quick scheme that involves plugging in a magic money printer machine; it’s a worldwide competition to provide security

Read More »
Why Wrapped BTC can depeg
Che Kohler

Why Wrapped Bitcoin Can Depeg?

Wrapped Bitcoin (wBTC) is a bitcoin voucher or promissory note that can be generated by submitting bitcoin to a custodian or smart contract bridge. Once

Read More »