Have you received a Bitcoin paper wallet, possibly as a gift, tip, prize, or through a Kiosk? Are you wondering how to spend the money contained on this paper wallet? Spending funds from a paper wallet is a three-step process that can be done by anyone with a Web browser and an Internet connection. This guide shows how.
Step 1. Create a Web Wallet
Claiming the funds on a paper wallet requires software. This software is usually referred to as a “wallet”, which should not be confused with your paper wallet. Web wallets offer an especially convenient kind of software that runs within a browser.
Visit blockchain.info to start a new Web wallet. An email address is optional, but helpful for recovering your account should the need arise. Enter a password at least 10 characters long. “Captcha” is a code for ensuring you’re a human user, not a computer program. After confirming the Captcha, click Continue.
You’ll receive a message titled: “Wallet Recovery Mnemonic”. The sequence of words in the message can be used to recover your wallet credentials should you forget them. If you don’t follow the suggestion to print these words at this time, they can be viewed again after logging into your wallet.
After clicking Continue, you’ll be asked to log in. Your “Identifier” should already be filled in. Enter your password from the previous screen and click Open Wallet.
Step 2. Sweep the Paper Wallet
Having created a Web wallet, the next goal is to fund it. To do this we’ll transfer the funds from the paper wallet into the Web wallet through a process called “sweeping”.
Log into your Web wallet. From the top row of links on the “My Wallet” screen, click “Import/Export”.
You’ll be presented with a screen warning you that things could get “complicated and confusing”. Provided that you follow the steps in this guide, this shouldn’t be the case. Click “I Understand”. You may need to enter your password again to continue.
At this point it’s necessary to explain a little bit of jargon. The thing we’ll be working with is called a “private key”, and it’s used to verify you control the funds on your paper wallet.
On many paper wallets, the private key appears to the right or bottom of the front side. It may also be on the reverse side or even covered by tamper-resistant tape. Usually, the private key is represented as both a QR code and a long sequence of numbers and letters. Often this sequence begins with the number “5”.
If your private key begins with the number “6”, your paper wallet has been encrypted. In this case, you’ll need the paper wallet’s password, which should have been given to you along with the paper wallet.
Although private keys can be manually entered, a QR code scanner makes the job easier. Scanner apps are available for free on most computers and mobile devices.
Returning to your blockchain.info wallet, enter your private key into the second text field marked “Import Private Key”. Click the “Add Private Key” button when done.
A warning message labeled “Import Private Key Warning” will appear. Your web wallet offers two different methods to add funds from a paper wallet:
- Import: Less secure, but requires no fee. The paper wallet continues to hold funds after import.
- Sweep: More secure, but requires a 0.0001 bitcoin fee. After sweeping, the paper wallet is empty.
Unless you have a good reason to import, sweep your paper wallet instead. For details, see Bitcoin Paper Wallets From Scratch. Click the “Sweep Key” button to continue.
You should hear a beep. Click on the “My Transactions” menu link to view the status of your transaction. Your transaction will initially appear as “unconfirmed”, meaning the network hasn’t yet processed it. Sweeping the paper wallet has emptied it and moved the entire balance into the Web wallet.
After about ten minutes, your transaction will show its first confirmation. It’s a good idea to wait for this to happen, but funds can usually be spent within a minute or less after sweeping.
Step 3. Buy Something
Congratulations! You now own a funded Bitcoin web wallet. You may ask yourself what you can do with it.
One way to use your new Web wallet is to buy something. The number of stores accepting Bitcoin, both online and offline, is growing daily. Here’s just a small selection:
- Overstock.com Wide selection of goods
- Tiger Direct Electronics
- Glyde Used electronics
- 6 dollar shirts Unique t-shirts
- Fiverr Services starting at $5
- Cryptothrift Auction site
- Bitdazzle Handcrafted goods
One of the more versatile ways to spend bitcoin is through Gyft. This service sells a wide range of gift cards from retailers including WalMart, Target, and Amazon. An added benefit of using Gyft is its points system, which offers a 3% reward on gift cards bought with Bitcoin.
Let’s buy a Gyft card with Bitcoin. After creating an account and logging in, use the search function to find a card. In this example, I’ll be buying a $10 Amazon gift card.
Select the Bitcoin payment option and click the Proceed button. A payment invoice will appear showing the dollar and bitcoin amount of your purchase. The exchange rate is calculated automatically.
Unlike credit card payments, which are usually made from the same website as your purchase, Bitcoin payment are made from your wallet. To pay for this purchase, we’ll need to transfer some information from the payment invoice to the Web wallet.
Beneath the “Pay with Bitcoin” graphic is a line of text beginning with the number “1” (yours will be different than the one depicted). This is called the “payment address”. Copy it to your system clipboard.
Next, return to your web wallet. Click the “Send Money” tab. Paste the Gyft payment address into the “To” field, then enter the amount of bitcoin to transfer (in my case, 0.0229). You may notice a slight variation between the exchange rate quoted by Gyft and the one quoted by Blockchain.
Your Gyft payment window should update with the message “This invoice has been paid”. It can now be closed. The Gyft card is available for immediate use.
Your web wallet should show an unconfirmed transaction in the amount of your payment. Like the first transaction sweeping funds from your web wallet, this one will gain one confirmation every ten minutes or so.
The balance shown in the upper right of the screen should now reflect the initial amount of the paper wallet less the amount of your purchase.
Spending funds from a paper wallet is a three-step process consisting of:
- Creating a web wallet or alternatively, a software wallet
- Sweeping funds into the Web wallet
- Spending funds from the Web wallet
There’s much more to using Web wallets and Bitcoin. If you plan to continue using your Web wallet, now might be a good time to back it up if you haven’t already. Having experienced how easy online purchases are with bitcoin, you may want to do some more. See The Secret to Buying Bitcoin with Cash and Getting the Most from Your First Bitcoin Purchase for starting points.