Table of contents 1.
What is Electrum? 2.
Creating a new wallet 3.
Using Electrum 4.
Enabling a full list of addresses 5.
Notes1. What is Electrum?Electrum is a
free and open source software wallet which is available on many different platforms (Windows, OSX, Linux and Android). Unlike Bitcoin Core client, Electrum doesn't need to download any additional data because it connects to external servers. Don't worry, Electrum never sends your private key anywhere, it is stored locally which means that you are responsible for the security of your bitcoins.
You can download Electrum from
here. You can always verify the signature of the downloaded file to make sure that the file wasn't modified by anyone using for example GnuPG (Linux) or Gpg4win (Windows).
2. Creating a new walletElectrum, at first launch, will ask you whether you want to connect to the server you know or do it automatically. If you don't know anyone trustful who runs an Electrum server then you should let Electrum connect automatically.
Next, you can type in the name of a new wallet or select your existing wallet by clicking "Choose". By default, your wallet should be located in "C:\Users\USERNAME\AppData\Roaming\Electrum\wallets" (Windows) or in "~/.electrum" (OSX and Linux). It is important because you will be able to backup the wallet file later.
You should see 4 options:
- Standard wallet
- Wallet with two-factor authentication
- Multi-signature wallet
- Import Bitcoin addresses or private keys
This time I would like to focus only on the first and on the last option, but what is the difference between these four kinds of wallets?
Standard wallet - it allows you to create a brand new wallet (with either Legacy or SegWit type of addresses). Only one private key is necessary to sign a transaction for this kind of wallet.
Wallet with two-factor authentication - a type of multi-signature wallet. You are given 2 of 3 keys. The third one is managed by TrustedCoin service. Google Authenticator is also needed.
Multi-signature wallet - a wallet with multiple private keys needed to spend from it. You can select up to 15 cosigners and any number of required signatures.
Import Bitcoin addresses or private keys - useful for creating watch-only wallets (in case you want to use air-gapped solution which needs one device for preparing transactions and another for signing them).
Select "Create a new seed" to create a new wallet. Electrum supports many different hardware wallets such as TREZOR, Ledger and Keepkey, but they are not free obviously.
Standard option generates a legacy type of addresses (starting with 1). This type is currently the most common one since it was available from the beginning of Bitcoin's existence.
SegWit addresses can start either from 3 (nested SegWit) or bc1 (native SegWit). Electrum generates native SegWit addresses which still might be not compatible with every service. Unfortunately, Electrum does not allow you to generate nested SegWit addresses which are backwards compatible. However, it is possible to import a nested SegWit address private key if you created your wallet on a website which supports this type of address. Transactions made to SegWit addresses are cheaper and take less space in a block. This helps Bitcoin a bit when the whole network is under huge load.
Since SegWit adoption is growing, I have decided to select "SegWit".
Here you can find more information about SegWit.
This is a very important step. These 12 words are needed to recover your wallet in case you lost access to the backup of you wallet. Don't save your seed on your computer. You should write it down on a paper and store it in a secure place. Some people advise to use things like
cryptosteel to make sure that your seed won't be destroyed by water or fire. Consider using a passphrase. It will act as 13th word of you seed which will be known only by you. You can enable it in "Options".
After you hit next, you will have to type in the seed you have just written down and enter a password which will encrypt your wallet file.
3. Using ElectrumCongratulations! You have just created your new wallet. Now, you are ready to receive and send Bitcoin. The window which is currently opened, shows your balance and previous transactions. It is obviously empty because nobody has sent you any bitcoins.
To see your Bitcoin address, select "Receive" tab. If someone wants to send you some bitcoin then the only thing you have to do is to copy "Receiving address". It might change after someone sends money to that address but don't worry. You can reuse your previous addresses.
Sending Bitcoin is fairly easy. Paste the address to which you would like to send BTC in "Pay to" field and enter the amount below. "Description" isn't broadcasted anywhere, you can use it to label transactions. The slider at the bottom indicates the fee for sending a transaction. Electrum automatically selects a proper fee to get your transaction confirmed in the next few blocks.
4. Enabling a full list of addressesThis feature is useful if you want to use several addresses at the same time without funding them. Normally, address changes in the "Receive" tab after one use.
To see a full list go to "View -> Show Addresses".
You should now see "Addresses" tab where there are all of your addresses. You can also spend bitcoins from a specific address by clicking a right mouse button and selecting "Spend".
5. NotesElectrum gives you a full control of your private keys. You are responsible for their security. That's one of the biggest advantages of software wallets. It is not a perfect solution since malware can affect you, but that's why it is important to consider using air-gapped storage for larger amount of money in crypto.
I have created this tutorial in order to help people who use web wallets because they don't know how to use Bitcoin Core or Electrum. I didn't include any information about more advanced features such as coin control and creating a multi-signature address because I doubt that a complete newbie would be interested in using them. I have created a separate tutorial covering many advanced features of Electrum, you can find it
here. Feel free to propose changes to this tutorial.
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