Questions to Electrum

[Miau222]

After reading in some posts here i need some knowledge about your vocabulary. It’s sometimes like Martian.


I’ve read the word “seed / phrase” and “passphrase” and “extra words”and “pin” and “General-pin” and “key” in different context and it seam to me many newbies are a LITTLE BIT confused about that.

“Charles-Tim said: But hope you did not include extra word (passphrase)?”
So is it not an good advice to use extra words as an passphrase? It an extra security to the wallet, isn’t it?

Some people and shops using Lightning because it’s cheaper and faster. If i have to restore the wallet (maybe lost) with the seed, will everything be restored, even all Lightning-nodes and payments?

If i restore the wallet, can i safely change the seed/pin so that the wallet cannot be compromised from others, someone who found it?


So i want to study the basics before start here. Thanks a lot for your answers!

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[Rath_]

So is it not an good advice to use extra words as an passphrase? It an extra security to the wallet, isn’t it?

It is a good idea to set a passphrase as long as you have a reliable backup strategy. You should not keep your seed and passphrase together.

Some people and shops using Lightning because it’s cheaper and faster. If i have to restore the wallet (maybe lost) with the seed, will everything be restored, even all Lightning-nodes and payments?

You can't restore your Lightning channels from your seed. You have to use the built-in backup functionality (File -> Save backup). However, you should avoid importing old wallet backups as it might cause your Lightning channels to close and in some edge cases, you might lose money. You can safely recreate your wallet with your seed on some other device at any time, but you won't be able to access coins locked up in your channels.

By the way, if you want to learn more about Lightning support in Electrum, visit Electrum Lightning Network walkthrough.

If i restore the wallet, can i saftly change the seed/pin so that the wallet cannot be compromised from others, someone who found it?

You cannot change your seed and passphrase (13th word). You can change your wallet password which only encrypts your wallet file. You should generate a new seed and move your coins if your wallet is compromised.

[hosseinimr93]

Passphrase is added to your seed phrase and make your wallet generate completely different addresses. Passphrase can be any combination of words and characters.
Password is used for encrypting your wallet file locally.

When you generate a wallet on electrum, it gives you a seed phrase including 12 words. The seed phrase can be extended with a passphrase (extra words or characters).
To add a passphrase, you should click on "options" and check "extend this seed with custom words".

In the case you want to recover your wallet using your seed phrase, you need your passphrase (if there's any) too. You don't need your password when recovering the wallet using the seed phrase.

[Charles-Tim]

Seed phrase which is also called mnemonic is the 12, 15, 18, 21 or 24 (12-24) words that hierarchical deterministic (HD) wallet generates. The seed phrase is used to generate the seed while the seed generate the master private key. From the master private key are the master public key generated. Also through irreversible process, the child keys (private key and public key) and addresses are generated. To know more about HD wallets, you can find the this interesting:

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

If there is any change in the seed generated, the master keys, the child keys and the addresses generated will be entirely different. If an extra word called passphrase or extended word is included, then different seed will be generated from the same seed phrase when the extra word was not included. This will result to generation of different master keys, child keys and addresses.

So, if your seed phrase is known but you included the extra word while generating bitcoin wallet, then the person will still not able to know your keys and addresses. But if you notice anything suspicious, best to move your coins to another addresses on a newly generated wallet.

When importing a seed phrase, the extra word, extended word or the passphrase is very important, if not known, then different keys and addresses will be generated and your coin will be lost and not accessible because different wallet will be generated with different keys and addresses as explained above.

Rath_ has given the perfect explanation, also especially about lightning network, the seed phrase backup is for onchain not for lightning network, there is a special backup for that as explained by Rath_.

About password, this remain intrinsic to your wallet, not necessary when importing seed phrase, but passphrase is necessary if included when your first generated the wallet.

[Rath_]

You cannot change your seed and passphrase (13th word).

To be precise, you can import your existing seed and extend it with any passphrase, but as others have said, Electrum will generate completely different addresses. So, if only your passphrase is compromised, you can safely reuse your seed if you stored it in a separate location. However, you will need to move your coins via an on-chain transaction to a new address.

[Miau222]

These are good advises, thanks. i will study them, even the link’s.
Normally the bank take care of this. But here the Person have the totally freedom about the amount but take care of all. I think the potentialities are much greater but the risk also. It is like a “coming of age”.

So every day i end my business with Elektrum Electrum, then i make an backup. And then i can restore everything if needed (File -> Save backup), even the lightning channels, right?

[@Rath_]
“move your coins” and “non-chain transaction” is “Lighning”? Or did You mean “copying”?

You can safely recreate your wallet with your seed on some other device at any time, but you won't be able to access coins locked up in your channels.
Is it not possible to transfer the last PC-backup to mobile Elektrum Electrum App and restore and work there? (Same version of Elektrum Electrum)

[Rath_]

So every day i end my business with Elektrum, then i make an backup. And then i can restore everything if needed (File -> Save backup), even the lightning channels, right?

I quickly glanced over Electrum GitHub page and it turns out that such backups contain only static backups of Lightning channels. They can be only used to force-close channels; in other words, you will be able to recover your funds, but you won't be able to make Lightning payments anymore. You should make a new backup whenever you open a new channel.

If you want to make a backup which will allow you to keep using your channels, you have to copy your wallet file manually. It is located in %appdata%/Electrum/wallets directory. However, this is extremely risky. If you accidentally use an out of date copy, you might lose some of your coins due to conflicting channel states between you and your channel partner.

“move your coins” and “non-chain transaction” is “Lighning”? Or did You mean “copying”?

"on-chain transaction" and "move your coins" refer to a normal Bitcoin transaction from one address to another.

Is it not possible to transfer the last PC-backup  to mobile Elektrum App and restore and work there? (Same version of Elektrum)

I don't think that you can import a PC backup on your mobile and vice-versa, but don't quote me on that.

[Miau222]

But i hope the Lightning-support will increase in future versions. It will be necessary, if transactions cost 3...50$ (like some guys report) small amount will be useless.

@all
Thank you for your answers!

[Pmalek]

“Charles-Tim said: But hope you did not include extra word (passphrase)?”
So is it not an good advice to use extra words as an passphrase? It an extra security to the wallet, isn’t it?

Most of your questions were already answered. I just wanted to add that using a passphrase or seed-extension is considered an advanced feature. Advanced in the sense that you now require two things if you want to recover your coins:

• You need your seed.
• And you need the passphrase.

Without both, you won't be able to spend the coins protected by the passphrase. You need to know that before setting up and storing your passphrase.

It will be necessary, if transactions cost 3...50$ (like some guys report) small amount will be useless.

Bitcoin transactions have actually been cheap for a long time. If we are going to use a USD equivalent, most of the time, you will be able to quickly move your coins for $0.10 or $0.20. Maybe a bit more, maybe a bit less. It all depends on the weight of your transaction, inputs, outputs, and things like that.

Don't confuse mining fees when using a non-custodial wallet with withdrawal fees when using a centralized exchange. It is true that exchanges require their customers to pay $3, $5, $10 or $20 to withdraw their coins. But that's not a fault of the Bitcoin network. It's just them making profit on people who are making withdrawals.

[o_e_l_e_o]

I’ve read the word “seed / phrase” and “passphrase” and “extra words”and “pin” and “General-pin” and “key” in different context and it seam to me many newbies are a LITTLE BIT confused about that.

Just to cover all these terms:

Seed phrase - usually 12 or 24 words which are used to back up your entire wallet and all the addresses in it.
Passphrase - an optional additional word, phrase, or string, which is combined with the seed phrase when generating your wallet. If used, you also need to back this up. You can use multiple different passphrases with the same seed phrase to generate multiple different wallets.
Extra words - same as the passphrase.
PIN - some software will encrypt your wallet file with a password or PIN. You will need this to unlock your wallet file when you open that software. You do not need this to recover your wallet from your back ups.
Key - can be either a master key or an individual key, and can be either a public key or a private key. Keys are generated from your seed phrase, and are then used to generate individual addresses. You mostly do not need to worry about them - your wallet handles the interactions with them, and they can all be recovered from your backed up seed phrase +/- passphrase.

(like some guys report)

A lot of people don't understand how fees work, and a lot of people say things which are incorrect in order to try to promote their altcoins or tokens. Bitcoin fees continue to be very cheap at present.

[Miau222]

[@o_e_l_e_o]
Very nice lexicon. And good to hear from an experienced user about the Bitcoin fees.

Creating multiple wallets with 2 or 3 passphrases is a interesting feature for me. Can i do this in Electrum?
The passphrase/extra word is given during creating the wallet. When i open my wallet with the pin, then is there any way to open some hidden child-wallets? Maybe it’s a feature for new versions. Electrum with multiple wallets is welcome, a (wo)man with multiple personalities not.

[@Rath_]
The path to the wallet i found in a hidden folder: /home/miau/.electrum/wallets/
Only 2.7 kByte. Maybe have to put some coins in, then the file will be heavier.

[Charles-Tim]

Creating multiple wallets with 2 or 3 passphrases is a interesting feature for me. Can i do this in Electrum?

I think you want to create more than one wallet individually, which I believe it is still the second question below.

The passphrase/extra word is given during creating the wallet. When i open my wallet with the pin, then is there any way to open some hidden child-wallets?

On computer
You have generated one wallet already, on the GUI, click on file -> new/restore -> name your wallet if need be -> click next. You will be able to generate another wallet in the same way you generated the first one.

To access any wallet you created, on the GUI, click on file -> open -> click on the one you want.

On mobile
On the GUI, click on the three dots at the right upper corner -> click on wallet -> new -> name your wallet. You will be able to generate another wallet in the same way you generated the first one. With what I explained, you can click on the three dots and click on wallet to access any wallet you want.

Maybe it’s a feature for new versions.

The newest version is still version 4.1.5. I have been using Electrum since version 4.0.6 and I can create new wallet in a way you can have more than one wallet on a single Electrum wallet app, this is not new at all.

Know that wallet will be better on computer than mobile phones because you do not carry computers about like phones.

But if you want 2-of-3 Multisig wallet, you can read this:

Creating a multisig wallet

[Rath_]

Creating multiple wallets with 2 or 3 passphrases is a interesting feature for me. Can i do this in Electrum? [...] When i open my wallet with the pin, then is there any way to open some hidden child-wallets?

You need to create a separate wallet for each passphrase. Create a new wallet with the same seed. Once you type in your seed, select "Options", "Extend this seed with custom words" and add your passphrase as the 13th word.

Only 2.7 kByte. Maybe have to put some coins in, then the file will be heavier.

Yes, it will be larger. Some of my wallets weight more than 1 MB. Once you enable and use Lightning, it should increase in size significantly.

[Charles-Tim]

You need to create a separate wallet for each passphrase. Create a new wallet with the same seed. Once you type in your seed, select "Options", "Extend this seed with custom words" and add your passphrase as the 13th word.

Exactly. But I am thinking Miau222 wants to create seperate wallet on the same wallet app, but if this is what he meant, like 2 passphrase for one seed phrase wallet, I have not seen a wallet like that before and not possible on Electrum.

@Miau222
I have just noticed you repeated Elektrum in your post, it is Electrum. Be careful of fake sites. You can download the wallet from https://electrum.org and make sure you verify its signature.

[o_e_l_e_o]

Creating multiple wallets with 2 or 3 passphrases is a interesting feature for me. Can i do this in Electrum?

Of course. You would create a wallet, write down the seed phrase it gives you, and then choose to extend with custom words and enter the first passphrase you want to use. Then you would create a second wallet, enter the same seed phrase you have already written down, and extend it with a different passphrase. You now have two wallets which use the same seed phrase but different passphrases. You can keep adding as many new wallets as you like. You should back up your seed phrase and every passphrase you use on separate pieces of paper.

Note that in such a set up, if you lose a passphrase then you lose access to that particular wallet, but if you lose your seed phrase, you lose access to all your wallets.

When i open my wallet with the pin, then is there any way to open some hidden child-wallets?

No. And also note that every time you create a new wallet with Electrum, it saves it as a new file in your wallets directory. Anyone who gains access to your computer will therefore be able to see all the wallet files you own, even although they might not be able to open them if they are password protected with a strong password.

Only 2.7 kByte. Maybe have to put some coins in, then the file will be heavier.

Your wallet holds private keys which give you the ability to unlock coins which are stored on the blockchain. The coins are never held in the wallet, and so the number of coins you put in your wallet has little impact on the size of the wallet file. It's more to do with how many private keys and addresses you generate, how many channels you open, etc.

[Miau222]

@Miau222
I have just noticed you repeated Elektrum in your post, it is Electrum. Be careful of fake sites. You can download the wallet from https://electrum.org and make sure you verify its signature.

You're right and i've edit my posts, even the Subject. Sorry please. And please can someone edit the Subject of other posts? No one should be confused about that and then loading a fake-version.

Exactly. But I am thinking Miau222 wants to create seperate wallet on the same wallet app, but if this is what he meant, like 2 passphrase for one seed phrase wallet, I have not seen a wallet like that before and not possible on Electrum.

This is what i meant. But to create separate wallets with the same seed don't make any sense to me.

So i'm ready to start now ...

[o_e_l_e_o]

But to create separate wallets with the same seed don't make any sense to me.

It doesn't really, in this scenario.

One of the main benefits to using a passphrase is plausible deniability. If, for example, someone was to compromise your seed phrase and recover your wallet, they would be able to steal any coins on that wallet. If you also use an additional passphrase, not only will they be unable to steal any coins on that passphrased wallet, but indeed they won't be able to discover that the passphrase wallet even exists. A commonly talked about scenario is to leave a small amount of coins on the seed phrase only wallet, while having the main bulk your coins on the additional passphrased wallet. If someone steals your seed phrase or physically threatens you, you can give up the small amount of coins accessed using only the seed phrase, keeping the passphrased wallet completely secret and the coins on it completely safe.

In your scenario here of creating multiple wallets on Electrum, then the plausible deniability is lost in the event your computer is compromised as someone can just look at your wallet folder and see all the different wallets you have. They won't know which ones are protected by which seed phrase or which ones use a passphrase, but they can attempt to bruteforce the password on all of them or force you to unlock them.

Additional passphrases make more sense when using hardware wallets, when you have a single seed phrase on the hardware device and want to unlock multiple different wallets. When using software wallets like Electrum, often it is simply better to create a new seed phrase for each wallet.

[Pmalek]

One of the main benefits to using a passphrase is plausible deniability. If, for example, someone was to compromise your seed phrase and recover your wallet, they would be able to steal any coins on that wallet. If you also use an additional passphrase, not only will they be unable to steal any coins on that passphrased wallet, but indeed they won't be able to discover that the passphrase wallet even exists.

The software you use is a very important factor in all this. Isn't Ledger Live handling passphrase-protected accounts in a very bad way?

All the accounts that it scans and finds, are added to your portfolio view. I guess the same goes for your passphrase-protected accounts. Those remain part of your portfolio even after you delete a certain wallet app from your Ledger hardware wallet, for example. Unless you manually delete the passphrase-protected account in Ledger Live, I think it remains visible in the portfolio. There was some discussion about this in the past, but I don't remember the specifics. If what I wrote is correct, anyone who managed to access your Ledger Live app could see everything you have, unless you deleted the things that are supposed to remain hidden.

[o_e_l_e_o]

All the accounts that it scans and finds, are added to your portfolio view.

I don't use Ledger live, but I have also read that this is the case, so I believe you are correct.

There are a couple of ways around this. The easiest but least secure would be to use Electrum or a similar third party wallet to interact with your hardware wallet, and to delete the passphrased wallet file after you've finished using it. It will be trivial to recreate it next time you want to use it by entering the passphrase on the hardware wallet. However, someone who knows what they are doing could recover the deleted file and discover the existence of your passphrased wallet.

A better solution would be to use whole disk encryption, so no one who accesses your computer can access your data. You could still be forced to unlock your computer, though.

The best way, then, would be to only interact with your passphrased wallet on a live OS which erases all traces after you are finished. That way there is no data for someone to steal, and you can have plausible deniability about the wallet ever existing.

[Miau222]

don’t have hardware-wallets for the moment, but Your proposal seems interesting even for software-wallets. No one could physically steal / compromise data that don’t exist. But these liveOSes i know are read-only Linux Iso-images on CD / USB-Drive. That mean i use Internet with an outdated system, maybe with a lot of leaks.

Could it done with an ordinary Debian with an external USB3.0 hard-drive? It’s fast enough and maintainable. Plug-off and there is a nice harmless computer without any wallet-software. Disk encryption (without /boot) is also possible. And the wallet is not connected permanently to internet.