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Author Topic: TUTORIAL: How to use Electrum (for beginners)  (Read 196 times)
BitCryptex
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April 30, 2018, 06:41:16 PM
Merited by pooya87 (3), TMAN (3), HCP (2), LoyceV (1), bitcoin revo (1), BTCforJoe (1), jseverson (1)
 #1

Table of contents

      1. What is Electrum?
      2. Creating a new wallet
      3. Using Electrum
      4. Enabling a full list of addresses
      5. Notes


1. 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 wallet

Electrum, 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 Electrum

Congratulations! 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 addresses

This 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. Notes

Electrum 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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May 01, 2018, 12:15:43 PM
 #2

Great tutorial! I'll link newbies that have problems setting up wallets here from now on.

The only thing I would like to add is a tldr; on Segwit:

Pros:
  • Lower fees
  • You're helping the network scale

Cons:
  • Some wallets/services don't support payments for it yet

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May 03, 2018, 04:51:01 PM
 #3

Great tutorial! I'll link newbies that have problems setting up wallets here from now on.

The only thing I would like to add is a tldr; on Segwit:

Thank you very much for your feedback. I have just changed a few things in my tutorial.



APPLY FOR INVESTMENT
GET WHITELISTED

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May 09, 2018, 02:37:51 AM
 #4

Awesome guide! That definitely deserves a couple of merit! Cheesy

I just have one minor correction:
Unfortunately, Electrum does not allow you to generate nested SegWit addresses which are backwards compatible.
That isn't entirely accurate. Electrum DOES allow you to create the "3"-type P2SH "nested" SegWit wallets... it just doesn't do it with "Electrum" seeds... only with BIP39 seeds and is probably not really a "beginner level" exercise. Wink

What you do is use a BIP39 compatible seed (generated from https://iancoleman.io/bip39/ or a BIP39 wallet etc)... then when setting up the wallet, use "Standard wallet -> I already have a seed -> click "Options", select "BIP39 Seed" -> Enter your BIP39 seed, click Next -> You'll be prompted for derivation path, select "p2sh-segwit BIP49":


The derivation path will change to m/49'/0'/0' and the addresses generated with be the backwards compatible nested SegWit Addresses Wink

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May 09, 2018, 03:50:06 AM
 #5

just a couple of points that weren't in OP.

Electrum is newbie friendly but at the same time it is flexible to be used in a more advanced way. for example there are a lot of additional tabs, some of which are best be enabled. for example in this part:
Quote
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.
if you enable the Address tab it is better in my opinion. you can see all your addresses in one place and even add a label for each of them.
also in the Receive tab the "Payment Request" option is always confusing for newbies so enabling Address tab and using that may be a better option in my opinion.


Quote
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.
i find it best to enable "Edit fees manually" from preference so that i can see how much i am paying and type in the fee amount, specially in new version there is a satoshi/byte option which i can fill instead of a fixed total fee.
additionally the "replace by fee" option is best to be enabled although i believe it is enabled by default in the new version. this will help you to easily bump the fee if it was needed.
and finally the "Preview" button is what i always use. i have never actually clicked Send right away! i always preview my transaction, double check everything and then sign and broadcast.

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May 09, 2018, 05:14:47 PM
 #6

Unfortunately, Electrum does not allow you to generate nested SegWit addresses which are backwards compatible.
That isn't entirely accurate. Electrum DOES allow you to create the "3"-type P2SH "nested" SegWit wallets... it just doesn't do it with "Electrum" seeds... only with BIP39 seeds and is probably not really a "beginner level" exercise. Wink

I have actually mentioned it in the next sentence without giving further explanation. I will include that in my next tutorial.

Quote
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

@pooya87 Thanks for your suggestions. I will edit my tutorial once I have some spare time. I will try to finish a tutorial on more advanced features of Electrum by the end of this week. Do you have any idea which more advanced features of Electrum might be difficult to use for some people?




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May 09, 2018, 10:59:33 PM
 #7

I have actually mentioned it in the next sentence without giving further explanation. I will include that in my next tutorial.

Quote
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
Yes, but I wasn't talking about importing a "private key" tho... I'm saying that you import can create an entire SegWit wallet using the BIP39 seed. For the most part, it will function exactly like a "Standard" Electrum SegWit wallet... you'll just be missing the ability to view your seed.


@pooya87 Thanks for your suggestions. I will edit my tutorial once I have some spare time. I will try to finish a tutorial on more advanced features of Electrum by the end of this week. Do you have any idea which more advanced features of Electrum might be difficult to use for some people?
I think you should mention 2FA wallets... and how they work... and how much they charge for service fees! Tongue

A LOT of new Electrum users setup 2FA wallets and don't read the disclaimer correctly... they miss the bit about the charges, and then scream scam when they get charged 0.001 in their first transaction for 20 credits. At least mentioned in the description you have that extra service fees (charged by TrustedCoin) apply... Link here: https://api.trustedcoin.com/#/electrum-help

Other advanced features to consider explaining:
- Dynamic Fees
- Replace-By-Fee
- BTC vs. mBTC unit display (Electrum defaults to mBTC I think)
- maybe consider describing how to do an offline/online (watching-only) wallet setup?
- MultiSig wallet setup
- If you have access to one, describing how to use Hardware Wallets with Electrum

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May 10, 2018, 03:33:22 AM
 #8

@pooya87 Thanks for your suggestions. I will edit my tutorial once I have some spare time. I will try to finish a tutorial on more advanced features of Electrum by the end of this week. Do you have any idea which more advanced features of Electrum might be difficult to use for some people?

your title says "for beginners" so maybe it is not the best idea to add all these extra information to it for "advanced features". or at least don't do it in the main part. you can add an extra part at the bottom saying "for more advanced users" then put them there. @HCP covered them, if i could think of any i will add.

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May 15, 2018, 08:35:36 PM
 #9

I have just updated the tutorial with the table of contents to make it easier for new users to find the most important information for them and guide on enabling a list of addresses. I have also created another tutorial which covers more advanced features of Electrum which might not be easy to understand for newbies.

https://bitcointalk.org/index.php?topic=3774520.0



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