Bitcoin Paper Wallets Or Hardware Wallets: Which Is Safer?There is an urban myth that bitcoin paper wallets are the safest way to store your bitcoin long term. They are promoted as the better choice than a hardware wallet like Trezor or Ledger. That myth is just plain wrong and it is time it was debunked and laid to rest.What Exactly Is A Bitcoin Paper Wallet?A paper wallet usually refers to a printed piece of paper containing a bitcoin address and private key generated by a site like bitaddress.org:What Is A Bitcoin Hardware Wallet?A bitcoin hardware wallet is a micro-controller or smart card based device that stores the private keys of bitcoin addresses generated by an HD (deterministic) bitcoin wallet. Here is an example of the Trezor hardware wallet:In an deterministic bitcoin wallet all the private keys and addresses you will ever use are derived from a seed phrase. The seed is usually twelve or twenty four words. Examples of HD wallets would be Multibit HD, Electrum or the browser based wallets used by Trezor or Ledger.The bitcoin hardware wallet keeps the private keys for your bitcoin stored offline safe from theft. When you need to spend bitcoin the hardware wallet connects by USB and signs transactions you generate in the online or desktop bitcoin wallet.Consider when you are using an HD bitcoin wallet the seed phrase is your bitcoin. The hardware device used to sign and send transactions is incidental. All the bitcoin addresses and keys you will ever use in the wallet are derived from the seed.You can lose your hardware wallet with no risk to your bitcoin savings. Just buy another and recover from seed. You can also use your seed in a compatible desktop wallet if you like. As long as your seed is safe you will never lose your bitcoin or have them stolen from you by malware.So What Is Wrong With Paper Wallets?Bitcoin paper wallets if used properly by someone who understands their limitations are fine, if limited in scope and security. Problems occur when new bitcoin users do not take the time to really learn how their paper wallets work and lose bitcoin.Storing bitcoin in paper wallets is safe enough but spending funds is much less so due to the use of change addresses.There are many examples of paper wallet users who spent a portion of the bitcoin in their wallet and did not realize that the balance was sent to a change address different from the sending address.The most common mistake people have made in the past is to import a paper wallet with say 50 bitcoin into a wallet like blockchain.info, spend one or two bitcoin, and then assume that the paper wallet still holds 48 bitcoin.They did not create a new paper wallet for the change, assuming the change was sent back to the original address, and lost their bitcoin. Here is another fellow who lost 90 bitcoin from a paper wallet.When you need to use bitcoin in a paper wallet all the bitcoin should be swept into a wallet like Electrum or blockchain.info from where you can then spend bitcoin. Never try to spend directly from your paper wallet, and after emptying your paper wallet and making your purchases create a new paper wallet for storage.Paper wallets are promoted as a safe and secure way to store bitcoin for beginners. In actual practice they should be reserved for bitcoin veterans who fully understand change addresses and the difference between sweeping and importing private keys.Also remember that bitcoin stealing malware is common today. When you are creating a paper wallet, any malware on your computer can read the private keys. If you print out the paper wallet the attack surface is increased as your private key will be sent out over your network unencrypted.Even if you use an encrypted paper wallet you are still in danger from keyloggers. A hardware wallet is immune to these attacks.Beginners who want to protect their bitcoin from theft would be much better served by using a hardware wallet like Trezor.What About Piper Wallet?Piper Wallet is a $199 device for generating and printing paper wallets:Paper wallets printed by Piper have the same disadvantages as ones you print for free from bitaddress.org.Even if you use a Piper to print out your paper wallet at some point you will have to sweep the private keys into an online wallet to spend your bitcoin. At that time your private keys can be stolen by malware. Also consider you can buy a hardware wallet for half the cost of a Piper Wallet.Urban Myth Disproved: Hardware Wallets Really Are Safer Than Bitcoin Paper Wallets.I think I have shown the dangers inherent in bitcoin paper wallets. Even bitcoin veterans who understand how change addresses work could still have their private keys stolen by malware.New users to bitcoin who want to keep their bitcoin safe from theft will be better served by ignoring paper wallets and buying one of the affordable hardware wallets like Trezor or Ledger.I prefer Trezor over the alternatives. The online user manual is better than the competition and the device itself is compact, easy to carry and affordable at $99. While learning how to use bitcoin do yourself a favor and forget about paper wallets. Start off safe and use a hardware wallet like Ledger or Trezor to store your bitcoin.