What is Electrum?
Electrum wallet is was one of my very first bitcoin wallets, and I still find it to be the most secure software wallet today. It is 100% open source, non-custodial, and simple to use. This wallet allows you to be in full control of your funds at all times, with zero third party involvement. With this wallet, you really are your own bank. As seen in the sides above, you can install this wallet in under eight simple steps. In this article we will go through them together and explain each feature and option as we go.
How to Install and Set Up Electrum
- First you will want to download this wallet from the official website: https://electrum.org
- This wallet can be installed on Windows, OSX, Linux, and Android (available on Google Play).
- Once downloaded, the install process is the same no matter the device, so lets get started..
Name Your Wallet
Open the install file and you will see the Electrum Install Wizard. The first thing you will be asked, is to name your new wallet. This name can be anything you wish.
Select The Standard Wallet
Next you will be asked what type of wallet you wish to create. Standard wallet will be what most new users will want to select, but we will explain each option below.
The most common, a simple bitcoin wallet with everything you need to start transacting instantly.
Wallet with two-factor authentication
Creates a multisig wallet with a third party service called TrustedCoin. A multisig wallet requires 2 of 3 keys to unlock your bitcoin. This is done for extra security. You will hold two keys, one online, and the second offline. TrustedCoin holds the third key that will be used to sign transactions on your behalf via a remote server.
Since TrustedCoin only holds one, you remain in full control of all your coins. Should you ever need to move your coins without the TrustedCoin service, you simply do so using your second offline key. This two-factor authentication setup requires a smartphone with Google Authenticatior installed.
This works much like the above method, but without a third party service involved. You will create an Electrum wallet on two or more devices, and must sign a transaction from each device before your funds can be spent. This is a more complex setup, but good for high net-worth individuals or businesses as it provides extra security.
Import Bitcoin addresses or private keys
This is the option you would chose if you where restoring funds from a private key. This is most commonly used to import a private key from another bitcoin wallet. This option can also be used to import a public key to your wallet, which would simply create a “watching only” wallet. As the name implies, you can’t do anything other then watch transactions from a public key.
Create A New Seed
Next you will create a new seed. A seed is a unique mix of special words, that when placed in the exact order generate your bitcoin wallet, public keys, and private keys. Should you ever lose access to your wallet, this seed will be the recovery phrase that will restore your wallet, funds, and all its transaction history.
Create a new seed
This is the option you will select to create a new seed for your Electrum wallet.
I already have a seed
You would select this to restore a wallet that you have created in the past.
Use a master key
This option is for if you have an Electrum wallet on another device, or have created an offline wallet, and wish to create a watching-only wallet. You can not spend from a watching-only wallet as it does not contain your private keys, but you can view your public addresses, and receive payments to a watching-only wallet.
Use a hardware device
You would select this option only if you have a hardware wallet you wish to connect to Electrum. An example of a hardware wallet would be a Ledger or Trezor.
Chose your seed type, and for this almost everyone will want to select Segwit at this point.
Just about everyone across the Bitcoin ecosystem now supports Segwit addresses, as they are the cheaper, faster, upgraded transaction type. This is what you will want to select.
When Segwit was fist introduced not every platform had upgraded yet, so not all addresses where comparable. Segwit has been around for about 4 years now, and it has become the standard in bitcoin.
Write Down Your Seed Words
Writing down and storing your wallet generation seed is the most important part of this entire process. Store this seed in a safe and secure place, and never share it with anyone. If anyone else gains access to this seed, they can restore, and gain full access to your entire Electrum wallet. It is recommended that you write this down on paper, and store it offline only. This is the seed you will use in the next step to generate your full wallet, so be sure to write down your seed before clicking next, you will need it in the next step.
This should be left alone unless you are an advanced user. However, if you are an advanced user, this will allow you to add an extra word to your seed word for a little extra security. This is not recommended for your first wallet. If you use this option, and then forget the word, you will also not be able to restore your wallet. This is however a cool feature for advanced users as for every character you enter, the entire wallet will change completely. One use case for this is creating a dummy wallet, where you have one wallet using the 12 word seed, and a completely different wallet restores after entering the 13th word. Again, not recommended for regular users.
Confirm Your Seed Words
Here you will confirm your seed by typing it in the box and then clicking next. This is to make sure you actually wrote it down, correctly, and in the right order.
Create A Password
Here you will simply create a password to access your wallet. You will need this password every time you open your wallet. This password is to access your wallet locally only, it has nothing to do with your seed phrase. If you do forget this password, you can always restore your Electrum wallet using your seed that you have written down.
Encrypt wallet file
I would leave this selected, as this makes it so no one can access your wallet file that is store on your device without the password.
Congratulations, That’s It!
Congratulations, That’s It! Welcome to your Electrum wallet, take a look around as there are several tabs but the wallet itself is very simple to use. When you first open the wallet you will see a History tab, Send, and Receive tab.
- History: Shows your transaction history
- Send: this is where you go to send bitcoin to someone else
- Receive: this is where you go to request bitcoin from someone else
If you want to be a bit more detailed, click View from the top menu and select Show Addresses and you will get an Addresses tab as well. On the Addresses tab you will be able to view all of your available bitcoin addresses in your wallet. These are all public addresses, so you can give them out for others to send bitcoin to. Each time an address is used, the wallet will automatically generate a new one, so you never run out.
Now fund your Electrum wallet by sending some bitcoin to one of those new bitcoin addresses, and enjoy knowing that you are now apart of the most secure digital payment network in the world.