"always spend all balance of paper wallets" - Then why am I using my paper-wallet for multiple transactions without any problem?

Question

I'am very confused. I just read on the most popular services for paper wallets that "You should always spend all the funds on a paper wallet, not part of it or you will lose the rest" . It links back to a reddit discussion with a short explanation that I don't really understand. Apparently it has to do with change addresses. This sucks.

In the last 3 months I've been using paper-wallets for several transaction of partial amounts without loosing anything. I generated privatekey + public key with vanity gen, imported the read-only public address into blockchain mobile app, and went on spending (scanning private key at need) and receiving on that very same address. Am I being lucky, wrong, or what? I really don't get it

I also printed several paper wallets for friends and workshops and after being imported (electrum, blockchain.info app) I saw people making partial transaction without losing the other part.

Answer 1

Most clients will return change to a newly-generated change address, which is not the same as the address on the paper wallet. So if you spend a partial amount, the rest of the coins will go to a change address in your client and the wallet will be empty.

You mentioned using Blockchain.info as your wallet. The Blockchain.info wallet behaves differently than most wallets. When you spend coins from a Blockchain address, the change goes back into the same address that you spent from. That's why your change remains in the paper wallet. But as far as I know, Blockchain.info is the only wallet software that works that way. If you were using any other client, you would have run into the change address problem by now.

It's generally not good practice to reuse addresses, because it makes your financial activity easier to track. And it's not a good idea to reuse a paper wallet. Once the private key has touched an Internet-connected machine, it's not necessarily safe anymore. It's possible that some malware on your phone might steal the key and empty your wallet. The whole point of a paper wallet is to keep your private key from touching the Internet. Once you've spent coins from a paper wallet, you really shouldn't reuse it. You should move the rest of the coins to a new paper wallet.

Answer 2

Properly implemented software is supposed to handle partial spend from paperwallets (and send change back to the same wallet) without any drama.

If I remember correctly, in the reddit incident the change somehow got lost and was not specified in the tx outputs - as a result they went to the miners as transaction fees.