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A paper wallet is a very misnamed term, since it's in fact a "paper address" indeed (contrary to a "wallet" which stores multiples addresses, for ewample inside the wallet.dat file).
Lots of people are speaking about the safety of paper wallet. It's indeed easier than holding offline a wallet.dat file. But isn't it dangerous holding all your money inside only one address like the paper "wallet"?
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There's definitely a certain danger to it. According to this book http://www.totalbitcoinsecurity.com/ there are two easy ways to improve its security:
Why put all your money in one paper address? You can split it up and put it in several paper addresses. This makes each address a less attractive target.
You can use BIP38 to encrypt the private keys. If somebody steals your encrypted private key he'll still need to know the passphrase. This is slightly related to two-factor authentication: in order to access the wallet, you need both the private key (typically stored in paper) and the passphrase, which you could remember or write down somewhere else.
Disclaimer: I have no relationship to the cited book. I simply read it last week.
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A wallet is defined as a collection of private keys (with or without additional data). You can have multiple addresses in a paper wallet, just like you can have multiple addresses in a computer wallet. You can also have multiple paper wallets.
Hacking into your computer wallet allows stealing all the funds in all its addresses, just as stealing your paper wallet allows stealing all the funds in all its addresses. But stealing a paper wallet is considered harder than hacking into a computer wallet.
1Your statement is wrong. It's certainly not just a paper address. A bitcoin address is where you send coins to. You need the private key (which is not an address at all) to spend them. If you have 50 transactions sent to your address you don't have one amount in bitcoin, what you have is 50 transactions that can be used as input for a new transaction. In effect you have 50 coins of different denominations, so yes in that sense it is a wallet. A bit limited by the fact that there is only one private key, but nothing is stopping you from printing 50 private keys on a piece of paper (or better). – Jannes – 2013-12-31T07:23:35.673