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 Software 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 required, but need not be your own. The benefit of using your own email address is security; under certain scenarios, you’ll be able to recover your wallet. Enter a password at least 10 characters long. Check the box agreeing to the terms, then click Continue.

You’ll be presented with a getting started screen. Click outside the white area to dismiss it.

Step 2. Import the Paper Wallet

Having created a Web wallet, the next goal is to fund it. To do this, you’ll need to link your paper wallet with your Blockchain wallet. This can be accomplished through a process known as “importing.”

Log into your Blockchain wallet. One the left panel, click SETTINGS. If your browser is too narrow to show this panel, it can be displayed by clicking on the hamburger icon (☰) to the top right of the window. From the list of options, click Addresses.

At this point it’s necessary to explain some jargon:

address: a unique identifier used to direct Bitcoin payments;

private key: a secret that controls your ability to spend 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. Typically this sequence begins with the capital letters “K” or “L” or possibly the number “5.”

Unencrypted Paper Wallet. To the right is the private key, represented both as a QR code and a string of text beginning with the number “5” and written vertically. To the left is the address, which begins with a “1” when expressed alphanumerically.

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.

Encrypted Paper Wallet. Unlike an unencrypted paper wallet, this variety requires a password to unlock. Encrypted paper wallets can be identified by the “6” which starts the private key.

Begin the paper wallet import by clicking the Import Bitcoin Address button near the bottom of your screen.

Returning to your Blockchain wallet, import the address from your paper wallet. First, click the Import Bitcoin Address button near the bottom of the screen. Blockchain will present a dialog containing a text box and a button marked with a QR code logo. Click it.

Your computer’s camera should activate. Center the private key of your paper wallet, then bring it toward the camera. The QR code will automatically be read and transcribed into the text box. Click Import.

If your paper wallet is encrypted, you will be prompted for the wallet’s passphrase. Enter it into the field labeled “Password for private key,” then click Import. Decryption can take 10 seconds or more.

On completion of the paper wallet import, Blockchain presents a box with a summary. Review it, then click Close. Clicking Transfer will trigger a fee payment, which is what we’re trying to avoid. Click Cancel when asked whether you are sure.

Your paper wallet address, along with the balance associated with it, should appear below the Import Bitcoin Address button.

Step 3. Buy Something

Congratulations! You now own a working Bitcoin wallet. You may be wondering what you can do with it.

One way to use your new Web wallet is to buy something. For example, Overstock offers a wide selection of goods. Another option is Purse, which allows you to pay for products on Amazon.

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.

This example will demonstrate how to buy a Gyft card with bitcoin. After creating an account and logging in, use the search function to find a card. A $10 Cold Stone gift card is but one example of the cards that can be bought.

Click the card, then select the Buy for Yourself option. Pay with bitcoin by choosing the option marked “bitcoin” to the left. Then click the Buy Now button.

Gyft presents two payment processor options: Coinbase and BitPay. Either option works — BitPay will be used in this example. You’ll be asked for an email address in case of payment troubles. The validity of this email address isn’t checked. A payment invoice will appear showing the dollar and bitcoin amount of your purchase. The exchange rate is calculated automatically.

Read the following description carefully because you’ll have only fifteen minutes to make your payment. Although you can cancel and retry at any time, less remaining time increases the risks that your payment will become stuck. Consider making a dry run first, closing the invoice window before paying to understand what will be involved. Then make your real payment run.

A credit card payment transfers money passively. Bitcoin works differently in that you’ll need to actively send money from your Blockchain wallet to pay for your purchase. To do that, we’ll need to transfer some information from the payment invoice to the Web wallet.

The payment invoice currently shows a QR code, but we’ll need to get the address. To do so, click the Copy tab near the top. You’ll be warned that this this advanced option comes with risks. If you follow this guide, the risks should be minimal. But be aware that you could lose the entire value of your paper wallet to a mistake. Bitcoin payments are irreversible and there is no help line to call. In certain cases, even BitPay or Coinbase won’t be able to recover your payment. Click “I understand the risk.”

The next screen shows the two pieces of information you’ll need to make the payment: the payment amount and address. The payment amount appears in bold near the center. It should be denominated in BTC (bitcoin). The payment address appears near the bottom of the screen.

In your Blockchain wallet home screen, click the Send button. Under From, pull down your paper wallet address under Imported Addresses. Paste the Gyft payment invoice address in the To field. In the leftmost Amount field, paste the precise amount requested by the Gyft invoice.

Spending bitcoin requires the payment of a fee, and setting this fee is the purpose of the Transaction Fee field. It defaults to “Regular,” which is enough to cover the cost of many transactions. However, network fees float, rising when demand increases, and falling when it decreases. Understanding how fees work is a key skill that any serious Bitcoin user should master. At the very least, you should understand that setting a cheapskate fee can put your transaction into limbo for hours or days.

Having set up the payment form with From/To addresses, amount, and fee, click Continue.

You will receive notification of your payment success in two ways. First, your Gyft invoice window should close with a message indicating your payment was accepted. Second, your Blockchain wallet will show a pending transaction.

About Security

The procedure described here is inherently insecure and should only be used to redeem small sums of money. If performed on an insecure personal computer (most of which are), an attacker can steal your money leaving you with nothing. Larger sums of money residing on paper wallets should be handled with great care. At the very least, a solid understanding of cold storage is required.

Blockchain urges you to transfer the funds on imported paper wallets into a Web wallet address. This recommendation reflects the way Blockchain handles wallet backups. Backups should be a central component of any bitcoin savings system, but I don’t recommend using Blockchain for this purpose. I can, however, suggest looking into Electrum instead. Blockchain is a fine wallet for spending small sums loaded onto a paper wallet, but is a poor choice for long-term storage of bitcoin.

Conclusions

Spending funds from a paper wallet is a three-step process consisting of:

creating a software wallet; importing the paper wallet into the software wallet; spending funds from the software wallet.

There’s much more to using 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 gotten the hang of online purchases are with bitcoin, you may want to do some more. Check out the home page for future directions.