- If enough care is taken does the medium of storage matter? A paper is just as easy to steal details from as compared to a notepad file provided there's physical access though I do understand the average user is at much greater risk to malware than forced instrusion
Yes. The medium of storage does definetely matter.
As you have mentioned, paper can be stolen via physical access.
All of your digital data can also be stolen via physical access AND additionally via malware from all over the world.
Its not just because the 'average user' is at greater risk, it is because 90%+ don't know how to properly secure their internet connected devices.
It would adjacent to scam if websites would tell people to store their mnemonic seeds / private keys on their (online) computer (which mostly runs windows..).
- Wouldn't a air-gapped machine with an encrypted drive or atleast the file containing the seed secured by a competent passphrase be significantly more secure than something like a paper which can easily be lost or otherwise compromised
It doesn't really matter whether you encrypt your private keys on a hard drive or on a paper wallet.
Both can be compromised via physical access. None via internet. As long as the passphrase is strong enough (and the implementation of your encryption software is flawless) your fine.
Paper burns faster than a hard drive i'd say.. But a HD gets destroyed from an EMP..
No storage is perfect.. you just have to weigh the pros and cons of each method (and store several copies of your backup at different locations).