Paper wallets are extremely useful tools – beyond being one of the most popular and secure cold storage methods, they make it simple to transfer coins between owners. Adding and transferring coins from a paper wallet is common, but cashing-out is much less so. Luckily, software wallets incorporate tools to make this process straightforward.
Sweep Your Wallet
Your paper wallet is sort of like a piggy bank – you can add funds whenever you want, but it makes the most sense to withdraw them all at once. This is especially true for security purposes, as limiting exposure of your paper wallet’s private key is paramount to keeping your funds secure. You can access the funds on your paper wallet by “sweeping” (or importing) them to either a live wallet (like Trezor or Exodus) or an exchange service (like Coinbase).
Most services allow you to import them directly from your wallet’s private key, but there are two key exceptions. The first is BIP38-encrypted private keys – there are very few services that can directly import from an encrypted key (fun fact: these keys always begin with “6P”, rather than “5” for unencrypted keys). In these cases, you will need to use the “Validate” feature on the key generator to extract an unencrypted Wallet Import Format key before you sweep the balance.
The second exception is Coinbase, one of the most popular digital currency exchanges. Coinbase does not allow users to import funds directly from a paper wallet. Fortunately, software wallets offer an easy solution.
Transferring from a Paper Wallet to Coinbase
Coinbase, one of the most popular digital currency exchanges, is a vital marketplace for bitcoin sellers. Because users cannot directly import into it from a paper wallet, you must use a software wallet instead. Mycelium or Bread are great options – both are trustworthy, and you can use them as an intermediary to send coins to Coinbase.
After you have downloaded and set up Mycelium or Bread on your phone, you will need to locate your Coinbase receiving address. Use a separate device to log in to your Coinbase account. Under the “Accounts” function, click the “Receive” button to display a QR code on the screen.
Next, open your paper wallet and find your private key and corresponding QR code. Using your software wallet, scan the private QR code from your paper wallet. These settings are slightly different depending upon which service you use – in Mycelium, select the menu option for “Cold Storage”; in Bread, you will click “Menu” —> “Settings” —> “Import Wallet”. If you are using Mycelium, congratulations – you have successfully imported your funds to Coinbase! With Bread, you have transferred the funds from your paper wallet to your software wallet, and just need to complete an additional transfer through to send your coins to Coinbase. All that is left to do is sell your crypto and hopefully set out to make some cold, hard cash!