Storing the coins for day-to-day use?

[btcduster]

Yet another question.
I decided before buying bitcoin to organize their storage properly. I settled on the Electrum solution.
First, it doesn't take up as much space as Bitcoin-qt, it seems the most secure.
It's no point switch to hardware wallets just yet.
Second, I don't want to use BTC for store of value. I prefer to use them for shopping, small transactions as that's the initial point of bitcoin.

I want Electrum to be installed in 2 places at the same time, both will be online. If I change the password of the first installation, what happens to the second one, I couldn't find an answer?

Note: I tried to reply to some old topics but I get a warning not to answer but to open a new topic, so I did.

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[hosseinimr93]

I recommend you to make two separate wallets with different seed phrases. Use one of them for storing your bitcoins (It's more secure to keep it offline) and use the other one for keeping small amounts for your daily uses.
It's not secure to have a single wallet in two devices.

Anyway, if you would like to have a single wallet in two devices, first make a wallet in device 1 and create a new seed. In device 2, make a new wallet but this time select "I already have a seed", Import the seed phrase generated in device 1 into device 2.

If I change the password of the first installation, what happens to the second one, I couldn't find an answer?

If you change the password in one of devices, it won't affect the other device.

[mocacinno]

@hosseinimr93 is 100% correct.

I just wanted to address your very specific question completely:

--snip--
I want Electrum to be installed in 2 places at the same time, both will be online. If I change the password of the first installation, what happens to the second one
--snip--

The (short) answer: nothing

The (long) answer (slightly simplified):
When you use the same recovery seed to create 2 wallets on 2 devices (as mentioned by hosseinimr93), both devices will use the same master private key (since this master key is calculated using only the seed phrase, not the password).
This master private key is used to derive private keys, the private keys are used to calculate public keys, the public keys are hashed to create addresses.

In other words, both wallets will contain the same private keys/addresses. If you fund one of these addresses, both wallets will update/increase their balance. If you spend an unspent output funding one of the addresses managed by your wallets, the balance of both (identical) wallets will decrease.
It's a difficult concept for new members... Most new members think the wallet actually stores your bitcoins... This is not true... Bitcoins aren't anything physical. Your balance is actually just the sum of unspent outputs funding addresses whose private key(s) you controll. These unspent outputs are registered on the decentral ledger: the blockchain. So, your two wallets actually only contain keys to spend unspent outputs that are registered on a decentral database.
Your wallet is merely a "window" to the blockchain. It's a nifty tool that parses the decentral database for you, and sums up all entries funding an address that is controlled by your wallet. So, both wallets can contain the same keys, and offer the same "view" of the blockchain.

The password is used to encrypt your wallet file... But the wallet files itself should contain more or less the same data (i say "more or less" because you can also store metadata, like labels...)

@hosseinimr93 is right tough: it's not a good idear to use the same seed phrase for a mobile and a desktop wallet. If you lose your mobile, or if your seed gets compromised because it was on an insecure device, you'll lose all your funds!

[btcduster]

Let me sum everything up, see if I understood correctly.
If I want to have two wallets, one on the phone and the other on the computer, they must have different seeds.
I can use the same seed, but it is not recommended.
In fact, my wallet gives me access to the funds in that address which is found on the blockchain.
For instance, I can have 1000 wallets accessing the particular address with funds, then the wallet is kind of a debit card, accessing my bank account.
I used to wonder if that was the case. Now it sounds much more logical.

Thank you all,especially to @mocacinno, I see you have the same ad as o_e_l_e_o, It seems that everyone who has this mixer ad is quite tech-savvy.

[tranthidung]

Second, I don't want to use BTC for store of value. I prefer to use them for shopping, small transactions as that's the initial point of bitcoin.

You can create multiple wallets (through Electrum) with different seeds and sure with different strong passwords (some call it as passphrase). You must keep small amount of BTC in each wallet. If you lose one wallet (by hack) you will have other wallets to use.

Always backup seeds and passwords, passphrases. Seeds are more important because with seeds you will be able to recover your wallets and setup a new passphrase. Passphrase itself has main goal to protect your wallet seeds. If you use Electrum on mobile, you will need PIN code as well.

I want Electrum to be installed in 2 places at the same time, both will be online. If I change the password of the first installation, what happens to the second one, I couldn't find an answer?

No. With same seeds, you can install it in multiple devices with different passphrase.

There is a way to set up one of your devices as a cold wallet with Electrum. Wait for few minutes I can give you details.

Okay, here's the procedure to create a cold-storage mobile Electrum wallet:

• 1. Install Electrum on both devices, and create a standard wallet on the "cold storage" device, that will be your main wallet that contains all the keys and shouldn't be connected to the internet even once (a newly formatted device/new device is better).
  Make sure that the seed was saved in a physical backup like a piece of paper.
• 2. Click the wallet's name on top of the screen and click "Master Public key" twice to open the QR code.
• 3. On the online phone, create a new wallet using the option "Standard Wallet->Use a master key", then click the camera icon to scan the cold-storage wallet's QR code.
  This will create a watch-only wallet version of your cold-storage wallet.
• 4. Confirm if the address in the receive tab is the same.

Now to use those wallets:

• You just have to create a transaction using the online watch-only wallet using the send tab.
• Fill out the recipient, amount, etc. then, click pay (select if you want to opt-in RBF, yes) and click the QR code icon below.
• In the cold-storage wallet, go to send tab and click the camera icon on the right side and scan the other device's QR code.
• The transaction will be imported to the cold-storage wallet, now click option->sign (enter your pin) and it will be marked as "signed" above.
• Click the QR code icon, then scan this using your online watch-only wallet and the signed transaction will be imported and now you can use options->broadcast button to send it to the network.

If you're not familiar with Electrum's defaut bitcoin denomination, you can change it from mBTC to BTC in the settings->denomination.

Edit:
Thanks o_e_l_e_o for your words to correct my terminology.

[o_e_l_e_o]

-snip-

Be careful with your terminology. You are freely interchanging the words passphrase and password, and they do not refer to the same thing.

A passphrase is used to extend your seed phrase. Some people call it the "25th word". You can use multiple different passphrases with the same seed phrase, and each will lead to a different wallet and different addresses. If you lose/forget your passphrase, then you will also lose access to the coins in that wallet, even if you still have your seed phrase.

A password, on the other hand, is used to locally encrypt your wallet file. You can use multiple different passwords across multiple different devices with the same seed phrase, and each will unlock the same wallet and same addresses, which is what OP's original question was. If you lose/forget your password, then you can still recover the coins in that wallet provided you have your seed phrase.

[HCP]

Let me sum everything up, see if I understood correctly.
If I want to have two wallets, one on the phone and the other on the computer, they must have different seeds.

No... they do not have to have different seeds. It is just recommended that you use different seeds, so you don't lose everything if your mobile device is lost/stolen, as this is usually the more likely scenario, as opposed to your home computer being stolen.

I can use the same seed, but it is not recommended.

Yes.

In fact, my wallet gives me access to the funds in that address which is found on the blockchain.
For instance, I can have 1000 wallets accessing the particular address with funds, then the wallet is kind of a debit card, accessing my bank account.
I used to wonder if that was the case. Now it sounds much more logical.

It isn't so much the wallet per se... it's the private keys that are contained in the wallet that give you control. Wallet applications are just a convenient method to store/manage and use private keys.

But yes, if you have 1000 wallets that have identical private keys in them (ie. restored from same seed, or imported same private keys), then they would all be in control of the same funds. Kind of like accessing your internet banking from two different computers... still shows the same balances, because it is accessing the same "accounts"... likewise, if you have the same private keys, you're looking up the same things on the blockchain.

It seems that everyone who has this mixer ad is quite tech-savvy.

Not always.

[nc50lc]

-snip-

Be careful with your terminology. You are freely interchanging the words passphrase and password, and they do not refer to the same thing.

As far as I know, the SEED phrase extension is called "BIP39 passphrase".

The term "passphrase" alone is a password that can contain spaces with multiple words making it a "phrase" not a "word".
That's why I'm seeing some documentations that use passphrase instead of password for wallet encryption.

Example: Most Bitcoin Core documentations use passphrase instead of password (example1 | example2).

[tranthidung]

As far as I know, the SEED phrase extension is called "BIP39 passphrase".

The term "passphrase" alone is a password that can contain spaces with multiple words making it a "phrase" not a "word".
That's why I'm seeing some documentations that use passphrase instead of password for wallet encryption.

Example: Most Bitcoin Core documentations use passphrase instead of password (example1 | example2).

I re-read book and there are some more details.

Optional passphrase in BIP-39

The BIP-39 standard allows the use of an optional passphrase in the derivation of the seed. If no passphrase is used, the mnemonic is stretched with a salt consisting of the constant string "mnemonic", producing a specific 512-bit seed from any given mnemonic. If a passphrase is used, the stretching function produces a different seed from that same mnemonic. In fact, given a single mnemonic, every possible passphrase leads to a different seed. Essentially, there is no "wrong" passphrase. All passphrases are valid and they all lead to different seeds, forming a vast set of possible uninitialized wallets. The set of possible wallets is so large (2512) that there is no practical possibility of brute-forcing or accidentally guessing one that is in use.

Disadvantages

However, it is important to note that the use of a passphrase also introduces the risk of loss:

    If the wallet owner is incapacitated or dead and no one else knows the passphrase, the seed is useless and all the funds stored in the wallet are lost forever.

    Conversely, if the owner backs up the passphrase in the same place as the seed, it defeats the purpose of a second factor.

While passphrases are very useful, they should only be used in combination with a carefully planned process for backup and recovery, considering the possibility of surviving the owner and allowing his or her family to recover the cryptocurrency estate.

Source: https://github.com/bitcoinbook/bitcoinbook/blob/develop/ch05.asciidoc

It is likely a controversial terminology and it is why I made my previous post like that. I rarely use Bitcoin Core but I remember (already checked) with Bitcoin Core, you have to unlock wallet with walletpassphrase before you can use the next command dumpprivkey to get private key of a specific address.

Where are the terms password and passphrase come from, I don't know but it seems there are overlaps in their usecases.

In Electrum, developers use the term 'custom words' instead of passphrase. They emphasize the difference between 'custom words' and password

You may extend your seed with custom words.
Your seed extension must be saved together with your seed.

Note that this is NOT your encryption password.
If you do not know what this is, leave this field empty.

Personally, I choose to back up my mnemonic seeds and my strong passwords. I don't mind to use 'custom words'.

[o_e_l_e_o]

As far as I know, the SEED phrase extension is called "BIP39 passphrase".

It would certainly be better if everywhere called it that, but many places don't, which tends to make things confusing, especially for newbies. Most hardware wallets, for example, simply call it the "passphrase". Here are the Ledger and Trezor pages which do just that (bearing in mind that the Trezor team did create the entire concept).

I think the term "extension words", "extension phrase", "seed extension", or something similar would be a better choice to completely avoid confusion with other passwords/passphrases which function more like what people are used to when discussing passwords - as a method to log in to an account, gain access to a piece of software, or decrypt a file.

Where are the terms password and passphrase come from, I don't know but it seems there are overlaps in their usecases.

The text of BIP39 made use of the word "passphrase" to refer to these seed extending words - https://github.com/bitcoin/bips/blob/master/bip-0039.mediawiki#from-mnemonic-to-seed