This article is the starting point of the Satochip Electrum series which will show you how to use the Bitcoin Electrum client as well as the Satochip hardware wallet. Today, you will learn how to use the Electrum client in 10 easy and funny steps.
Table of content
- Step 1 — Download and install the Electrum client
- Step 2 — Launch the Electrum wizard
- Step 3 — Give a name to your wallet
- Step 4 — Create a new wallet
- Step 5 — The keystore
- Step 6 — Choose your type of addresses
- Step 7 — Generate and backup your very own seed
- Step 8 — Wallet file (.dat) encryption
- Step 9 — Send and receive Bitcoin
- Step 10 — Backup your Bitcoin wallet
The Electrum client is a complete and widely used lightweight (SVP) Bitcoin client that works on Windows, Linux and MacOS. Released under MIT licence, the open-source software is based on a client-server protocol. That means the client should connect to a ElectrumX server which will act as the blockchain information provider. Therefore you don’t need to download the entire Bitcoin blockchain on your personal computer 🆒.
In this article, we will explain how to use the Electrum client to create, use and backup a simple Bitcoin wallet. The private keys will be stored on your personal computer.
❗️ Disclaimer ❗️ : private keys are needed to get acces to your wallet thus your Bitcoins. If you store your private keys on your personal computer, you have to be sure it is not compromised by a malware or something else…
Step 1 — Download and install the Electrum client
The Electrum client is available on Windows (7 edition and higher), Linux (Ubuntu, Debian, Manjaro…) and MacOX. If you want you can also run it from the Python sources.
You can download the lastest version from the official Electrum website : https://electrum.org/#download. We strongly encourage you to check the file signature in order to download and install a verified version of the client.
Installation process is really easy. All you need to do is launch the executable file and follow the installation process. If you try to run the Linux AppImage, you will need to make the file executable using this command in a CLI :
chmod +x YourDownloadedFile.AppImage
Step 2 — Launch the Electrum wizard
At the first start, the Electrum client will ask you whether you want to connect automatically to the remote ElectrumX servers or select it manually.
Pros of the auto connect are :
- The client will automatically choose the best server for your needs.
- If a server is down, it will switch automatically to another .
Cons of the auto connect are :
- You need to trust ElectrumX server node operator.
- It learns about your total Bitcoin holdings and past transactions, and can gather all your past Bitcoin addresses.
Step 3 — Give a name to your wallet
The Electrum client will save several information on a local .dat extension file on your personal computer. This file will contain public and private keys as well as your transaction history, user labels… The default wallet file is called default_wallet, which is created when you first run the application and is located in the /wallets folder, inside the datadir.
Here, we choose to name our wallet file : Satochip.
Step 4 — Create a new wallet
Electrum supports many types of wallet :
- Standard wallet : a deterministic wallet with a single private key behind each address and no extra security option.
- Wallet with two-factor authentication : this is a standard wallet with an extra security option. A remote server acting to co-sign transactions, adding another level of security in the event of your computer being compromised.
- Multi-signature wallet : a common use-case for this is if you want to collaboratively control funds; maybe you and your friend run a company together and certain funds should only be spendable if you both agree. Another one is security; one of the wallets can be on your main machine, while the other one is on a offline machine. That way you make it very hard for an attacker or malware to steal your coins.
- Import Bitcoin addresses or private keys : this option will allow you to retrieve a Bitcoin wallet from private keys or create a “watch-only” wallet if you specify one or more Bitcoin addresses.
To keep it simple we will choose a standard wallet.
Step 5 — The keystore
Note : A seed phrase, seed recovery phrase, backup seed phrase or mnemotechnic passphrase is an ordered list of words needed to recover Bitcoin funds. Software wallet like Electrum will typically generate a seed phrase and instruct the user to write it down on paper. If the user’s computer breaks or their hard drive becomes corrupted, they can download the same wallet software again and use the paper backup to get their bitcoins back.
Here you have four options :
- Create a new seed : this will generate a new mnemotechnic passphrase (BIP32 and BIP173 compliant) for you. Note : new seed generated by the Electrum client does NOT support BIP39 (you can import an existing BIP39 seed but you cannot generate a new one).
- I already have a seed : choose this option if you already have a mnemotechnic passphrase and want to use it.
- Use a master key : choose this option to create a “watch-only” wallet or configure a multi-signatures wallet.
- Use a hardware device : choose this option if you want to store your private keys in a secure, offline, trusted device called a hardware wallet.
Note : in another article, we will show you how to create a new Bitcoin wallet using a Satochip hardware wallet.
Let’s create a new seed 🌱
Step 6 — Choose your type of addresses
The type of addresses used by your wallet will depend on your seed (previously mentionned as the mnemotechnic passphrase). Using the Electrum client, addresses can be from two type :
- Segwit : the most recent and supported Bitcoin address format implemented with the BIP141.
- Legacy : the original address format.
Segwit address format should be privileged but a lack of compatibility with older Bitcoin client or wallet might suggest you to use the legacy format.
Here we decided to use the new Segwit address format thus we choose the “Segwit Seed type”.
Step 7 — Generate and backup your very own seed
This is an important step while creating a new Bitcoin wallet : the seed. ❗️Please pay attention❗️
Disclaimer : The seed is a mnemotechnic passphrase that will allow you to open your wallet, spend and retreive your funds. If you loose this phrase, you may loose your Bitcoins !
This is you very own and secret seed (or mnemotechnic passphrase). Carefully write it down and store it in a safe place ! That’s the only thing you need in order to retrieve your Bitcoin wallet.
Because your seed is the most important thing, the Electrum client will ask you to type it twice (copy-paste does not work).
Step 8 — Wallet file (.dat) encryption
As said in the Step 3, some sensitive data is stored in your .dat wallet file (here, our wallet file is Satochip.dat).
For security reason, the wallet file may be encrypted on disk. Note that the wallet information will remain unencrypted in the memory of your computer for the duration of your session. If a wallet is encrypted, then its password will be required in order to open it.
Et voilà ! You have now a fully functional, easy to use and open-source Bitcoin wallet thanks to the Electrum Bitcoin client.
Step 9 — Send and receive Bitcoin
Electrum interface is quite easy to use. You have 3 tabs but can add more via the “View” menu.
History : will show you your transactions history; received and spent Bitcoins inlcuding the date, a short description (if added), the amount of the transaction and the remaining balance.
Send : will show you the interface to send Bitcoin to your friends.
Receive : will show you the interface to receive Bitcoin from your friends.
Step 10 — Backup your Bitcoin wallet
At the end, what do you really need to backup in order not to loose your precious Bitcoin or restore your wallet to another personal computer ?
Here is the perfect backup list :
- Your seed as shown in the Step 7. You can write it on a sheet of paper and store it on a secure physical vault.
- The password (if set) of your encrypted .dat wallet file as shown in the Step 8.
- Your .dat file as shown in the Step 8. The default path where the wallet files are stored is : ~/.electrum/wallets.
Seed and password can be easily memorized. But the .dat file that contains your private keys must be stored in your personal computer. That’s a major risk because you may have a virus or something similar.
That’s why we strongly encourage you to store your private key in a hardware wallet such the Bitcoin Satochip card.
More information about Electrum
Electrum provide a very helpful documentation where you can learn more about this incredible software wallet ! The official Electrum Read The Docs website is the one stop shop to know more about Electrum, ElectrumX, seeds, wallet encryption, multisignatures and so on.
More information about Satochip
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