I was using the ‘paper wallet restoration function’.
To anyone following this post, I suggest you perform a simple experiment (as I did 3 times)
1 - Create a paper wallet. Print out the paper wallet certificate, scan the QR code as directed, add the hand-written 9 words to the 27 word seed, re-enter all 27 words to confirm when directed to do so.
2 - Send 2 ADA to the paper wallet
3 - Now, restore the paper wallet. From Daedalus, select ‘Add Wallet’, choose ‘Restore’, then choose ‘Paper Wallet Certificate’, ‘Wallet Name’, ‘Paper Wallet Recovery Phrase’, then, select a Spending Password. Finally, hit the ‘Restore Wallet’ button.
Restoring a paper wallet takes about 2 hours on my machine.
A new Daedalus (hot) wallet now exists. However, it was created WITHOUT creating a 12 word recovery phrase.
Therefore, you will NOT be able to verify the wallet recovery phrase (More, Settings, Verify Wallet Recovery Phrase).
As Siamans (above) pointed out, you will only be able to send ADA from the newly restored Daedalus wallet to another (manually created) wallet with a 12 word recovery phrase. And, you should do so IMMEDIATELY since the restored Daedalus does not have a 12 word recovery phrase. If you computer is stolen, or crashes, you will not be able to recover your ADA from the ‘restored’ Daedalus wallet.
Anyone restoring their wallets from a paper wallet may get the false sense of security that their new, hot Daedalus wallet is safe - when, in fact, it has a huge vulnerability.