Paper wallets have always been considered to be a great solution for offline cryptocurrency storage. They are convenient and can be prepared in a few minutes. For some reason, people are still actively selling – and buying – pre-generated paper wallets on platforms such as eBay. It is evident this is a disaster waiting to happen.
NEVER BUY A PRE-GENERATED PAPER WALLET
In theory, there is nothing wrong with letting someone else create a paper wallet on one’s behalf. It is a pretty transparent process, yet it also involves a lot of risks. Given how the wallet’s private and public keys are clearly visible during this process, nothing prevents the person generating this wallet from storing a copy of this information. At some point, users of these pre-generated wallets may find their balances missing as a result.
When looking at the eBay platform, it seems there are still plenty of people selling paper wallets. While this is extremely convenient, it also shows there are a lot of risks out there. Even though some sellers, such as the one mentioned in this BitcoinTalk thread, may appear legitimate, it is usually a matter of time until they run off with people’s money. The cryptocurrency world has its fair share of scammers and thieves. Trust should never be given freely, as it needs to be earned.
As one would expect, the paper wallets purchased from this eBay seller were cleaned out not that long ago. It is possible some of his customers had their details compromised, but the most plausible explanation is that this eBay seller scammed buyers himself. It seems that close to 8 BTC has been stolen from various wallets already, although this number will probably go up in the future. Considering that this seller also offers paper wallets for other cryptocurrencies, it is possible the total losses are a lot higher overall.
Even though the people who purchased these paper wallets are also partially to blame, this type of action should not go unpunished. Whether or not the buyers will ever be able to file any charges against the seller remains to be seen. It is unlikely eBay will be of great help to them, as the company hasn’t been too keen on anything related to cryptocurrencies. It will be quite interesting to see how this story plays out, assuming enough victims come forward to file an official complaint.
If there is one thing to take away from all this, it is that people should never trust a paper wallet generated by someone else. Even if they receive one free of charge, it should never be used to store a large amount of funds by any means. There are many different ways to generate a paper wallet in a secure fashion without relying on any third parties. Doing so in an offline manner is always the best course of action.
Unfortunately, with the influx of novice cryptocurrency users, illicit schemes like this one will continue to thrive. As long as people do not conduct their own research before buying Bitcoin or altcoins, they will flock to convenient solutions first and foremost. Buying a paper wallet from someone else seems to be the preferred approach in this regard. Scams like these will not disappear anytime soon; that much is rather evident.