Noob questions about paper wallet(s) and Electrum - a bit overwhelmed

[vladman]

Hi,

Hope someone can help with some simple to follow steps.  I'm pretty IT savvy (Windows only), but the whole cryptocurrencies world is new to me (been mining about 6-7 weeks now), and it's all quite a steep learning curve.

I'm using the latest version of Electrum (1.9.7).  Recently, I've been having an issue (which many others seem to have) which is that all my transactions since 17th February are showing as unverified.  This doesn't seem to cause me any problems, and it's not the main reason for this post, although it would be nice to fix this (I tried most of the suggested fixes, none worked).

I've been reading more and more about malware that steals your BTC off your computer, and obviously don't want to have the results of all the hard work I put into this in the last couple of months wiped out in an instant, either by malware or by any other way (my own mistake, bad practice, anything else, etc).

So I think it would be a good idea to create a paper wallet.  However, I'm a little overwhelmed by the number of options, and various websites and tutorials that exist on the Internet, and scared about warnings that if not handled correctly, the entire balance can be lost.

I simply want a simple solution that's going to work and be fairly secure and safe.

I was even thinking about switching to the Armory wallet (partially because of all these unverified transactions in Electrum which I can't seem to fix), and because Armory seems more secure and includes a paper wallet option as one of its built-in features.  But in the end, I was reluctant to do it, as Armory needs to download this huge database, and generally seems like it might complicate my life further, instead of simplify it, which is what I'm after!  

Can anyone try and clarify all this for me and perhaps point me in right direction?

Also, is there any recommended BTC-stealing malware-detection software I can download and run in order to reassure myself my computer is "clean" of this type of malware?

Many thanks in advance,

Vlad.

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[vladman]

(gentle) bump... 

[btcbot]

You really don't need cold storage with Electrum.  It's that secure if you use offline storage and memorize or secure those magical 12 words. 

[vladman]

Thanks for taking the time to reply.

I think I'll continue to investigate this, I'd rater be safe than sorry, but what you said is reassuring.

[dabura667]

Thanks for taking the time to reply.

I think I'll continue to investigate this, I'd rater be safe than sorry, but what you said is reassuring.

1. The transaction confirmation bug will be fixed in the next release. Ways to fix it include deleting your blockchain_headers file which is in the parent directory above your wallet folder. After deleting it, start electrum and wait for it to re-download. Then click open wallet and pick your default wallet, even if its already open. And open it. This should fix the problem.

Paper wallet/wise... What exactly do you want to do with the paper wallet?

Why can't you use bitaddress.org etc. to make your paper wallets?

[vladman]

Hi Dabura,

Regarding the transaction confirmation bug, what you suggest is the only fix I didn't try, as other people said that gets rid of the history of the transactions, something I didn't want to lose.  I don't know if this is accurate though, as I haven't tried it.  If it's going to be fixed in the next release, I'll wait for that, as it doesn't affect me in any way (or perhaps it does, but I don't know it - can you confirm?), other than being a little annoying.

Regarding a paper wallet, it's really because I became worried reading various reports of lately how there are many (and more every day) malwares that are usually undetectable by normal anti-virus/malware software, and that they scan your computer for known wallet files, and steal them (or steal your BTC by some other way).  This is why I wanted a paper wallet, so that I can transfer the majority of my balance into it, where I believe it would be far safer (as long as I don't lose it or it gets destroyed).  I just got confused by the number of options (bitaddress.org you mention being one of them) out there, each one touting it's advantages over the other one, and I also became worried and even more confused reading about the peculiar way these paper wallets work in when you want to transfer the funds OUT of them into a "live" wallet to use - something about "change addresses", and how some of the balance goes into these addresses, and if you're not careful, you can lose some or all of the balance... I found a long thread about this on reddit and read it all, but just ended up even more confused, even though there were helpful people there trying to explain it (as well as lots of people like me who were just quite confused about it all).

Thanks, I'll get it eventually.

[btcbot]

I have to add, since I actually worked on it yesterday, that I've been using Electrum to generate paper wallets.  (It's for a project to make a Bitcoin fountain for my spouse, where I've assigned the address for weekly dividends from 2 of my AsicMiner shares.  She's got a QR code with just that private address, unencrypted and will use Mycellium's cold storage fetching to take money from it on an as needed basis).  For those who are not aware, Mycellium lets you repeatedly access paper wallets without having to worry about change address loss.

I created an Electrum wallet, while running Tails, offline, for one paper wallet and wrote down the 12 words just in case I need to run the wallet ever again and need to sign something.  The idea was to create one wallet for one private key of cold storage.

From the console I typed:

dumpprivkey('1blahblahblahblahblahblahblahblah')

Then take that private key that is output and run:

gui.show_qrcode("5blahblahblahblahblahblahblahblahblahblah")

I grabbed the QR code and printed it out.  Done...  A magical piece of paper, still backed by Electrum, which can be turned into money, repeatedly with Mycellium, as a few dollars a week drips in.  

 

[vladman]

I have to add, since I actually worked on it yesterday, that I've been using Electrum to generate paper wallets.  (It's for a project to make a Bitcoin fountain for my spouse, where I've assigned the address for weekly dividends from 2 of my AsicMiner shares.  She's got a QR code with just that private address, unencrypted and will use Mycellium's cold storage fetching to take money from it on an as needed basis).  For those who are not aware, Mycellium lets you repeatedly access paper wallets without having to worry about change address loss.

I created an Electrum wallet, while running Tails, offline, for one paper wallet and wrote down the 12 words just in case I need to run the wallet ever again and need to sign something.  The idea was to create one wallet for one private key of cold storage.

From the console I typed:

dumpprivkey('1blahblahblahblahblahblahblahblah')

Then take that private key that is output and run:

gui.show_qrcode("5blahblahblahblahblahblahblahblahblahblah")

I grabbed the QR code and printed it out.  Done...  A magical piece of paper, still backed by Electrum, which can be turned into money, repeatedly with Mycellium, as a few dollars a week drips in.  

 

Sounds good... Now I just have to re-read that a couple of times, to try and get my head around what exactly you did and how...  Thanks!  P.S.  What's "Tails"?

[btcbot]

I have to add, since I actually worked on it yesterday, that I've been using Electrum to generate paper wallets.  (It's for a project to make a Bitcoin fountain for my spouse, where I've assigned the address for weekly dividends from 2 of my AsicMiner shares.  She's got a QR code with just that private address, unencrypted and will use Mycellium's cold storage fetching to take money from it on an as needed basis).  For those who are not aware, Mycellium lets you repeatedly access paper wallets without having to worry about change address loss.

I created an Electrum wallet, while running Tails, offline, for one paper wallet and wrote down the 12 words just in case I need to run the wallet ever again and need to sign something.  The idea was to create one wallet for one private key of cold storage.

From the console I typed:

dumpprivkey('1blahblahblahblahblahblahblahblah')

Then take that private key that is output and run:

gui.show_qrcode("5blahblahblahblahblahblahblahblahblahblah")

I grabbed the QR code and printed it out.  Done...  A magical piece of paper, still backed by Electrum, which can be turned into money, repeatedly with Mycellium, as a few dollars a week drips in.  

 

Sounds good... Now I just have to re-read that a couple of times, to try and get my head around what exactly you did and how...  Thanks!  P.S.  What's "Tails"?

It's a Linux CD or USB Drive boot for any PC that comes up running a suite of anonymyzing systems.  For our purposes its a 'safe' and verifiably uninfected OS that you run offline with Electrum. 

https://tails.boum.org/

The main thing I did for that paper wallet was generate an unencrypted private key QR code from Electrum.  That's just those two commands.  The association with a dividend provider is up to you...   

[Abdussamad]

I have to add, since I actually worked on it yesterday, that I've been using Electrum to generate paper wallets.  (It's for a project to make a Bitcoin fountain for my spouse, where I've assigned the address for weekly dividends from 2 of my AsicMiner shares.  She's got a QR code with just that private address, unencrypted and will use Mycellium's cold storage fetching to take money from it on an as needed basis).  For those who are not aware, Mycellium lets you repeatedly access paper wallets without having to worry about change address loss.

I created an Electrum wallet, while running Tails, offline, for one paper wallet and wrote down the 12 words just in case I need to run the wallet ever again and need to sign something.  The idea was to create one wallet for one private key of cold storage.

From the console I typed:

dumpprivkey('1blahblahblahblahblahblahblahblah')

Then take that private key that is output and run:

gui.show_qrcode("5blahblahblahblahblahblahblahblahblahblah")

I grabbed the QR code and printed it out.  Done...  A magical piece of paper, still backed by Electrum, which can be turned into money, repeatedly with Mycellium, as a few dollars a week drips in.  

 

There's an electrum plugin here that does paper wallets:

https://bitcointalk.org/index.php?topic=374138.0

But please note the risks of revealing a private key in a deterministic wallet:

https://bitcointalk.org/index.php?topic=374138.msg4237294#msg4237294

[btcbot]

I have to add, since I actually worked on it yesterday, that I've been using Electrum to generate paper wallets.  (It's for a project to make a Bitcoin fountain for my spouse, where I've assigned the address for weekly dividends from 2 of my AsicMiner shares.  She's got a QR code with just that private address, unencrypted and will use Mycellium's cold storage fetching to take money from it on an as needed basis).  For those who are not aware, Mycellium lets you repeatedly access paper wallets without having to worry about change address loss.

I created an Electrum wallet, while running Tails, offline, for one paper wallet and wrote down the 12 words just in case I need to run the wallet ever again and need to sign something.  The idea was to create one wallet for one private key of cold storage.

From the console I typed:

dumpprivkey('1blahblahblahblahblahblahblahblah')

Then take that private key that is output and run:

gui.show_qrcode("5blahblahblahblahblahblahblahblahblahblah")

I grabbed the QR code and printed it out.  Done...  A magical piece of paper, still backed by Electrum, which can be turned into money, repeatedly with Mycellium, as a few dollars a week drips in.  

 

There's an electrum plugin here that does paper wallets:

https://bitcointalk.org/index.php?topic=374138.0

But please note the risks of revealing a private key in a deterministic wallet:

https://bitcointalk.org/index.php?topic=374138.msg4237294#msg4237294

Thanks for the tips... those risks was why I chose to use the wallet once.  I couldn't get that plugin to work for some reason and I really only wanted a QR code for the private key.

[vladman]

btcbot,

I read about Tails... It says it uses Tor as the means for its anonymization features.  What I'm wondering is if you boot into this OS and use it offline, why does it have to be Tails, can it not be any other live CD/USB Linux distribution?

I realise this is probably a noob question...

[Abdussamad]

btcbot,

I read about Tails... It says it uses Tor as the means for its anonymization features.  What I'm wondering is if you boot into this OS and use it offline, why does it have to be Tails, can it not be any other live CD/USB Linux distribution?

It can.

[btcbot]

btcbot,

I read about Tails... It says it uses Tor as the means for its anonymization features.  What I'm wondering is if you boot into this OS and use it offline, why does it have to be Tails, can it not be any other live CD/USB Linux distribution?

It can.

Yup.  

I just like it.  It's well-packaged and when you enable the persistence, you can store multiple wallets, etc. or just rebuild them on login, which is what I do, so there's never any trace of my offline storage.  You're ready to go with using Electrum through Tor, too. 

[dabura667]

Hi Dabura,

Regarding the transaction confirmation bug, what you suggest is the only fix I didn't try, as other people said that gets rid of the history of the transactions, something I didn't want to lose.  I don't know if this is accurate though, as I haven't tried it.  If it's going to be fixed in the next release, I'll wait for that, as it doesn't affect me in any way (or perhaps it does, but I don't know it - can you confirm?), other than being a little annoying.

Regarding a paper wallet, it's really because I became worried reading various reports of lately how there are many (and more every day) malwares that are usually undetectable by normal anti-virus/malware software, and that they scan your computer for known wallet files, and steal them (or steal your BTC by some other way).  This is why I wanted a paper wallet, so that I can transfer the majority of my balance into it, where I believe it would be far safer (as long as I don't lose it or it gets destroyed).  I just got confused by the number of options (bitaddress.org you mention being one of them) out there, each one touting it's advantages over the other one, and I also became worried and even more confused reading about the peculiar way these paper wallets work in when you want to transfer the funds OUT of them into a "live" wallet to use - something about "change addresses", and how some of the balance goes into these addresses, and if you're not careful, you can lose some or all of the balance... I found a long thread about this on reddit and read it all, but just ended up even more confused, even though there were helpful people there trying to explain it (as well as lots of people like me who were just quite confused about it all).

Thanks, I'll get it eventually.

Deleting blockchain_headers file does not clear your history. You're fine.

As far as paper wallets are concerned, the issue with paper wallets and change addresses stems from the concept of paper wallets coming about AFTER certain bitcoin software has been in corculation.

When sending bitcoin, all you're really doing is taking a transaction RECEIVED by the address, splitting it into three parts, the send amount, the change amount, and the miner fee, and then broadcasting those three outputs to the network so that the two addresses both get the bitcoin intended and the miner fee gets bundled in the block you are included in.

By default, a lot of software would always send your change to a new address, and some software wouldn't even display that address, so a lot of people lost bitcoin from not understanding this and backing up their entire wallet files.

However, nowadays, apps like Mycelium for Android have a paper wallet usage feature that sets the paper wallet address ITSELF as the change address for you automatically. This means if you send 10btc to your paper wallet, then spend two, you send two to the recipient, then send 8 back into your paper wallet (minus whatever you set as a fee)

If you want to be super careful, ubuntu LIVE USB or something similar that has never touched the internet should suffice. Then all you need to do is download bitaddress.org as an html file (ctrl s on your browser) and tranfer it to your ubuntu. Print your paper wallet, and you're good.

Having an Android phone then also means you can use myceliums paper wallet spending function, so carry a paper wallet with a small amount with you and maybe a few ones with larger amounts for your safe.

No need for armory etc.

Paper wallet swiping in Electrum would be a nice function. I will try to see if I can make something this weekend.

[vladman]

Dabura, thanks VERY MUCH for that detailed explanation.  I'll have to carefully think about it all in order to process and understand it all properly.  Man, I can't believe how complex all this stuff is - and I've actually been using computers for decades - imagine someone who isn't even comfortable using a computer yet.

One thing you said worries me slightly (although I have a feeling it's probably ok, and I'm only worried because of the lack of understanding).  You said a lot of people lost coins because of not understanding the stuff about unspent balances and change addresses, and by backing up their entire wallets.  This is something I've been doing.  A simple automated backup that backs up files and folders on my PC on a regular basis.  This now includes the Electrum folders and the wallet file.  Should I worry?

I have an Android phone, so have just downloaded the Mycelium app (I've previously had the "standard" Bitcoin app on my phone, but have never used it yet. I assume Mycelium is a better/more secure version of the same thing?).  I'll try and make some time this weekend to hopefully set all this up.

Thanks for your help.

[btcbot]

Dabura, thanks VERY MUCH for that detailed explanation.  I'll have to carefully think about it all in order to process and understand it all properly.  Man, I can't believe how complex all this stuff is - and I've actually been using computers for decades - imagine someone who isn't even comfortable using a computer yet.

One thing you said worries me slightly (although I have a feeling it's probably ok, and I'm only worried because of the lack of understanding).  You said a lot of people lost coins because of not understanding the stuff about unspent balances and change addresses, and by backing up their entire wallets.  This is something I've been doing.  A simple automated backup that backs up files and folders on my PC on a regular basis.  This now includes the Electrum folders and the wallet file.  Should I worry?

I have an Android phone, so have just downloaded the Mycelium app (I've previously had the "standard" Bitcoin app on my phone, but have never used it yet. I assume Mycelium is a better/more secure version of the same thing?).  I'll try and make some time this weekend to hopefully set all this up.

Thanks for your help.

Just so you don't worry, I'll give a quick answer: don't worry.  The problem was that most software (not Mycelium) works so that if you take a portion of a paper wallet's BTC, the rest will be lost because the system isn't provided with a change address.  Thus, the dictum, always take all the BTC from a paper wallet.  They used to be considered one-usage wallets before Mycelium. 

[vladman]

Just so you don't worry, I'll give a quick answer: don't worry.  The problem was that most software (not Mycelium) works so that if you take a portion of a paper wallet's BTC, the rest will be lost because the system isn't provided with a change address.  Thus, the dictum, always take all the BTC from a paper wallet.  They used to be considered one-usage wallets before Mycelium. 

Thanks.