Table of Contents
- 1 What Is a Cryptocurrency Wallet?
- 2 Electrum Wallet Review: What is the Electrum Bitcoin Wallet?
- 3 Electrum Wallet Review: How Good is the Electrum Wallet?
- 4 Electrum Wallet Review: How to Set Up the Electrum Wallet
- 5 Electrum Wallet Review: How to Use the Electrum Wallet
- 6 Conclusion
What Is a Cryptocurrency Wallet?Before we get down to our Electrum wallet review, I should first explain what a cryptocurrency wallet is.
Cold walletsThe most secure cryptocurrency wallets available are known as cold wallets. They are great for long term storage of cryptocurrencies. There are two main types of cold wallets: paper wallets and hardware wallets:
Paper WalletsPaper wallets provide the maximum level of security if you set them up properly. However, this isn’t easy to do in a way that is completely secure. They are free but due to the difficulty in setting them up, they are not recommended for new cryptocurrency users. Paper wallets allow you to print off your cryptocurrency wallet keys and store them offline. The only thing you need to do is keep the piece of paper secure. If someone gets access to the piece of paper with your wallet keys on it, they can get access to your wallet.
Hardware WalletsHardware wallets are great if you want a highly secure wallet for long term storage of cryptocurrencies and you’re not sure how to set up a paper wallet correctly. Examples of hardware wallets include the Ledger Nano S and Trezor devices. They provide a great balance between security and convenience. However, they’re not free. You will have to decide if the value of the cryptocurrency you want to protect is worth the cost of a hardware wallet.
Online WalletsOnline wallets are generally bad for storage of cryptocurrencies. However, they do serve a purpose. Online wallets are usually found at exchanges or other online services that use cryptocurrencies. You can deposit money at a hot wallet to use the service linked to it. You absolutely shouldn’t try to store cryptocurrency for any long periods of time on a hot wallet. This last point is very important – hot wallets are usually not under your control. One of the most important lessons to learn in all of cryptocurrency is that if anyone else can see your private key, they also control your crypto. For example, if you had crypto stored on the Bittrex Exchange and tomorrow Bittrex disappeared, would you still be able to access your crypto? Probably not… With any other wallet, it doesn’t matter what happens to an individual company, you will still control your coins if you backed up your keys correctly. Online wallets can be hacked or just disappear overnight. So, don’t use them for storage!
Electrum Wallet Review: What is the Electrum Bitcoin Wallet?The Electrum wallet is a simple, easy to use Bitcoin wallet. It was released in November of 2011. This makes it one of the oldest Bitcoin wallets available. It’s also one of the most trusted. The Electrum Bitcoin wallet only stores Bitcoin. It doesn’t offer support for any other cryptocurrency. This includes any of Bitcoin’s forks (such as Bitcoin Cash). However, cryptocurrency users have forked the Electrum software to offer support to different BTC forks. One example of this is Electron Cash. This wallet has nothing to do with the original Electrum wallet but it does use most of the same coding. It has been tweaked to allow users to interact with the Bitcoin Cash (BCH) blockchain. Note: A fork in cryptocurrency is a split in the network. They occur when a group want to make a change to the rules of the network. Hard forks result in a new version of the original cryptocurrency. Bitcoin Cash is a fork from Bitcoin and is the most successful example of a hard fork. source estimates that as of 2018, 10% of all Bitcoin transactions use Electrum.
Electrum Wallet Review: How Good is the Electrum Wallet?As I explained above, Electrum is a software wallet. This means it offers more security than an online wallet and less than either a well-made paper wallet or a hardware wallet. Although it is not the most secure cryptocurrency storage solution around, the Electrum wallet offers users a very user-friendly solution for sending and receiving Bitcoin payments regularly. If you like to use cryptocurrency for online payments then Electrum is perfect for keeping a small amount ready for use.
Electrum Review: Advantaged and DisadvantagesAdvantages
- Perfect for those who want to use Bitcoin to make regular payments.
- Password protection makes it harder for hackers to get into Electrum wallet.
- Instant on: Users don’t need to download the whole blockchain. Electrum wallet gets blockchain information from a server. This means there are no delays and it is always up-to-date.
- Private keys are never shared with the server. That means you don’t need to trust the server itself!
- No user information is stored with the server. Users control their own private keys and therefore their own Bitcoin.
- Open source software. Anyone can check the code for glitches, bugs, or security breaches.
- Completely free to download.
- Electrum calculates the amount of fees you will need to include with a transaction. It has a helpful slider that lets users select how urgent the transaction is. They can choose how many blocks (how long) it will take to be processed by the network.
- Electrum can be used as a multi-signature wallet. This increases the security of the wallet a lot.
- Users can use two-factor authentication with Electrum wallet. This also adds extra security to the wallet.
- Although it features lots of extra security features, Electrum is still a hot wallet. This means that all the issues that affect hot wallets are applied to it. It is possible for hackers to get into individual Electrum wallets.
- Only supports Bitcoin. This is fine if you only want to use Bitcoin with it. However, when hard forks happen on the Bitcoin blockchain, you will need to use a different wallet to claim the coin created by the fork (I had to do this with my own Electrum wallet when Bitcoin Cash forked off from the main chain in August 2017).
- There was a recent security breach (see below). It took the Electrum team a long time to fix it. This is something of a concern.
Electrum Wallet Review: Security OverviewThe Electrum wallet has lots of added security features to keep your Bitcoins safe. This makes it one of the most secure software wallets around. That said, it is not as safe as a wallet that rarely comes near an active internet connection (cold wallet). Electrum Review: Security Features of Electrum Wallet
- The encrypted wallet file that contains your private keys is protected with a password.
- Electrum wallet uses a seed phrase as a backup measure. This protects you if you lose your private key or the device that Electrum is installed on is lost or stolen.
- Electrum does not download any script. This means that even if a server is hacked, you won’t lose your Bitcoins.
- Since the server code is open source, anyone can run a server. This decentralised model protects users since there is not one point of failure.
- The programming language Electrum is written in is Python. This is an old and well-known language, so the code can be reviewed by many community members.
Electrum Wallet Review: How to Set Up the Electrum WalletSetting up an Electrum wallet of your own is very easy. I’ve detailed the steps for windows users below:
- Visit electrum.org and click “Download” at the top of the screen.
- Click “Windows Installer” this will download the necessary files to your computer.
- Open the download and follow the onscreen prompts as you would any installation process.
- Once it’s installed, open Electrum.
- You will now be asked if you want to create a new wallet or restore an existing one. I’ll assume you want to create a new one. Click the option “Create a new wallet”, “standard wallet” and then click “next”.
- You’ll then be presented with your recover seed phrase. It’s very important you write this down and guard it with your life! This will be used if you ever need to restore your electrum wallet without your private key. Don’t just create a file on your computer that contains the seed, write down the seed phrase down and store it somewhere safe.
- You’ll then be asked to enter your seed phrase again. This is to make sure you have wrote it down correctly. Seed phrases are one of the most important part of your Electrum wallet – don’t cut corners on their security.
- Next you will be asked to provide a password. Make it a strong one and one that you’ve never used anywhere else. This is another vitally important security step. Don’t just rely on a simple password – if it’s easy to remember, it’s easy to hack! When you’ve made your password and confirmed it, click “next”.
- You’ll then be asked to select which server you want to connect to. If this is your first Electrum wallet, I recommend you click “Auto connect”.
- Finally, click “next”. Your Electrum wallet is now ready to use. I told you it was easy!
Electrum Wallet Review: How to Use the Electrum WalletNext, I’ll show you how to send and receive a transaction with Electrum. That way you can get started using one of the simplest Bitcoin wallets around right away.
Receiving Bitcoin with Electrum WalletThe first thing you’ll likely want to do with your new Electrum wallet is to receive some Bitcoin. After all, you can’t send any Bitcoin from it until you have some to send! Receiving Bitcoin with Electrum is very easy. I’ve outlined the steps below:
- Click the “Receive” tab on the main Electrum window.
- Next to the “Receiving address” label, you will see a string of characters (under the red box above). Click the “Copy symbol” (two pieces of paper on a blue background). This will copy the public (receiving) key to your clipboard.
- Paste the public key to where you are sending the Bitcoin from. If you’re sending it from an exchange, paste the public key into the send address field under the withdrawal options on the exchange. Once you have clicked send, it may take a while to receive into your Electrum wallet.
- If you’re sending Bitcoin from a mobile device, you can use the QR code instead. This is under the large purple box above.
Sending Bitcoin with Electrum Wallet
- Click the “Send” tab at the top of the main Electrum Wallet screen.
- Copy the address you want to send Bitcoins to. This might be to an online store, a friend, or an exchange.
- Paste the address into the box that says, “pay to”. Always double check the address to make sure it is correct. You can do this by checking the first and last 3 digits.
- Enter the amount of Bitcoin you want to send in the box labelled “amount”.
- Adjust the fee using the slider. The smaller the fee, the longer your transaction will take. If the transaction is urgent, you can slide the slider over to the far right. This will cost more but will speed up the transaction a lot.
- Double check all the information is correct. Then once you’re happy, hit send.
ConclusionSo, that’s it, you’ve reached the end of my Electrum wallet review. I hope you found it useful. Together, we’ve looked at pretty much everything you need to know about one of the most popular and longest serving software wallets for Bitcoin. After reading this Electrum wallet review, you should now know:
- The difference between different kinds of wallets.
- The advantages and disadvantages of each of them.
- Exactly what Electrum wallet is.
- The applications that Electrum is useful for.
- The use cases that a more secure wallet is useful for.
- The answer to the question: “Is Electrum safe?”
- The unfortunate security breach of 2017 that Electrum managed to solve.
- How to install an Electrum wallet.
- How to use Electrum wallet to send and receive Bitcoin.