Electrum Bitcoin client — Set up a hardware wallet in 10 easy steps

This article is the continuation 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 with a hardware wallet to safely store your private keys on a dedicated device.

Satochip, multi-cryptocurrency physical wallet.
Satochip — Hardware wallet on a smart card.

Table of content

  1. Step 1— Download and install the Electrum Satochip client
  2. Step 2 — Launch the Electrum Satochip wizard
  3. Step 3 — Give a name to your wallet
  4. Step 4 — Create a new wallet
  5. Step 5 — The keystore
  6. Step 6 — The PIN code
  7. Step 7 — Generate and backup your very own seed
  8. Step 8 — Choose your type of addresses
  9. Step 9 — Wallet file (.dat) encryption
  10. Step 10 — Backup your Bitcoin wallet

Introduction

In our previous article, we explained you how to setup a Bitcoin wallet using the Electrum client. An easy to use step-by-step guide with the following conclusion :

Step 1 — Download and install the Electrum Satochip client

The Electrum Satochip client is a fork of the official Electrum client. It embeds the Satochip plugin that allow the hardware wallet card to interract with the software client.

  • For Linux user (link for version 4.1.5_012, please always download the latest version)
Github repository for the Electrum Satochip client.
Github repository for the Electrum Satochip client.
Github repository for the Electrum Satochip client.
How to make an AppImage file executable.
How to make an AppImage file executable.
How to make an AppImage file executable.

Step 2 — Launch the Electrum Satochip wizard

At the first start, the Electrum Satochip client will ask you whether you want to connect automatically to the remote ElectrumX servers or select it manually.

  • If a server is down, it will switch automatically to another .
  • It learns about your total Bitcoin holdings and past transactions, and can gather all your past Bitcoin addresses.
Satochip — Electrum — Auto connect.
Satochip — Electrum — Auto connect.
Electrum Satochip client — Auto connect.

Step 3 — Give a name to your wallet

The Electrum Satochip client will save several information on a local .dat extension file on your personal computer. This file will contain public 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.

Satochip — Give a name to your wallet file.
Give a name to your wallet file.

Step 4 — Create a new wallet

Electrum Satochip supports many types of wallet :

  • 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.
Satochip — Create a new standard wallet.
Satochip — Create a new standard wallet.
Create a new 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.

  • 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.
A Satochip Bitcoin hardware wallet and its card reader.
A Satochip Bitcoin hardware wallet and its card reader.
A Satochip Bitcoin hardware wallet and its card reader.
Satochip — Use a hardware device to store the keystore (and the private keys).
Satochip — Use a hardware device to store the keystore (and the private keys).
Use a hardware device to store the keystore (and the private keys).
Select your hardware device : Satochip.
Select your hardware device : Satochip.
Select your hardware device : Satochip.

Step 6 — The PIN code

The Satochip hardware wallet comes with an extra security feature : the PIN code; just like your bank card. Access to private keys (creation, derivation and signature) is enforced through the use of the PIN code (up to 16 char). This access control is needed every time you want to use the wallet. If a wrong PIN code is entered multiple time, the chip card get bricked. Even if you card is lost or stolen, your funds remain SAFU!

Satochip PIN code is an extra security feature.
Satochip PIN code is an extra security feature.
Satochip — Repeat the PIN code.
And repeat it twice.

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❗️

Create a new seed.
The Satochip-hardware-wallet.dat wallet personal seed.
The Satochip-hardware-wallet.dat wallet personal seed.
The Satochip-hardware-wallet.dat wallet personal seed.
Seed confirmation screen for the Satochip-hardware-wallet.dat wallet.
Seed confirmation screen for the Satochip-hardware-wallet.dat wallet.
Seed confirmation screen for the Satochip-hardware-wallet.dat wallet.

Step 8 — 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 Satochip client, addresses can be from three type :

  • Legacy : the original address format.
Satochip — The Segwit address seed type.
Satochip — The Segwit address seed type.
The Segwit address seed type.

Step 9 — 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-hardware-wallet.dat).

Satochip — Set wallet file encryption.
Set wallet file encryption.
Did you see the green Ginkgo leaf on the bottom right ? So your hardware wallet is connected.
Did you see the green Ginkgo leaf on the bottom right ? So your hardware wallet is connected.
Did you see the green Ginkgo leaf on the bottom right ? So your hardware wallet is connected.

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 or use another Satochip card ?

Satochip Bitcoin hardware wallet on a smart card.
Satochip Bitcoin hardware wallet on a smart card.
Satochip Bitcoin hardware wallet on a smart 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

💮 Join us on Telegram

Satochip — Secure the future.
Satochip — Secure the future.
Satochip — Secure the future.

Open source and affordable hardware wallet on smart card. More information on https://satochip.io — Follow us on Twitter : @SatochipWallet