Shredded Paper makes an excellent worm bin bedding. I prefer to use shredded newspaper but any type of shredded paper will work. Avoid the glossy section of the newspaper or the glossy junk mail. Shredded (ripped up) newspaper has enough bulk that it creates room for airflow and for the worms to wiggle around it but it also does a great job of absorbing and holding in moisture.
Another benefit is that you can easily find a free source of paper. You may also have a home paper shredder that you use to dispose of sensitive security information. I take great pleasure in feeding my red worms my paid bills and unwanted credit card offers!