Electrum Wallet Review
Electrum is a lightweight, non-custodial, bitcoin-only wallet. It allows you to store, receive, and send bitcoin. The wallet also offers a range of features, such as CoinJoin, Lightning, two-factor authentication, and multi-signature.
What is Electrum wallet? Electrum is a non-custodial open-source bitcoin wallet. It is a lightweight wallet that can be used on a desktop, mobile, or with the command line interface. Electrum is compatible with the hardware and multisig wallets. It supports Lightning Network for fast and cheap transactions and is intended to store, send, and receive bitcoin.
How Does Electrum Wallet Work
Electrum runs on such operating systems as Windows, Linux, macOS, Android, and Tails. You can download the desktop wallet from the official website or the Electrum mobile wallet from Google Play Store. Then create a new wallet and choose its type (standard, with two-factor authentication, multi-signature or watch bitcoin addresses). Your backup seed phrase, a specific set of 12 words that must be kept secret and secure, will be generated afterward. The service checks the correctness of the phrase and requests to re-enter it. Next, you can choose a password to encrypt your wallet keys or disable encryption. Though, this password can not be used to restore the wallet.
It is highly recommended to download Electrum wallet only from the official website and verify GPG signatures (they are used to verify the integrity of downloaded files and to ensure that the files have not been altered or corrupted in transit).
Electrum Android App
To use the Electrum wallet on your Android device, start by downloading the app from the Google Play Store. After installing the app, open it and proceed to create a new wallet with a name of your choice. Electrum offers three types of wallets to choose from: Standard, Wallet with Two-Factor Authentication, and Multi-signature wallet.
The Standard wallet is the simplest option, requiring no additional authentication measures. If you opt for the Wallet with Two-Factor Authentication, you will need a separate device with Google Authenticator installed. In this case, you will possess two out of the three keys required for transaction signing. The third key is held on a remote server, which charges a small fee for signing transactions. However, if you prefer not to rely on the remote server, you have the option to withdraw your funds using the ‘restore wallet’ feature.
For those seeking enhanced security and involvement of multiple participants, the Multi-signature wallet is available. When setting up a Multi-signature wallet, you will be prompted to specify the number of participants and the number of signatures required to access your funds. The minimum number of cosigners and signatures is two, while the maximum allowed is 15.
Additionally, if you have existing Bitcoin addresses or private keys, Electrum provides the functionality to import them into the wallet. Importing Bitcoin addresses enables you to create a watch-only wallet, allowing you to monitor the funds without the ability to spend them
Advantages of Electrum
- Simple Payment Verification (SPV) method. The SPV method allows verifying transactions without downloading the entire blockchain. It makes Electrum lightweight, thus enabling it to send and receive bitcoin quickly.
- Two-factor authentification. Electrum has two-factor authentication functionality, adding a new security level. 2FA uses a third-party service, TrustedCoin: it stores another key in addition to the one stored in the wallet file on your computer. Bitcoin cannot be sent without a transaction signature on the TrustedCoin side.
- Multisig wallet. This type of wallet requires two persons to sign off on a transaction before it can be completed. Multsig feature adds an extra layer of security and helps to prevent unauthorized access to funds.
- Anonymity. Electrum does not require registering with an email address or providing other personal information. The wallet does not reveal any personal information (no-KYC wallet). There is no Tor support functionality implemented into the application, but there is an instruction from the developers on how to use the wallet in the Tor network. You can use this possibility to get more anonymity.
- Watch-only wallet. This means you can view your wallet balance and create transactions without storing the private key.
- Cold storage support. To hold your sats and sign transactions, Electrum offers cold storage technology. It can be implemented in an offline software wallet (Electrum offers to install it on a device disconnected from the internet) or in third-party hardware wallets such as Trezor, Ledger, and Keepkey.
- Replace-by-fee (RBF). Electrum RBF feature allows you to replace an unconfirmed bitcoin transaction with a higher fee to speed up the process.
Disadvantages of Electrum
- No customer support. You can not use live chat or write an email to get answers to your questions. Instead, you can read documentation on the official website, visit the official Electrum forum or read the information on Twitter or Reddit.
- Some wallet versions are susceptible to phishing attacks. Electrum versions older than 3.3.4 are susceptible to phishing attacks, as well as other security vulnerabilities.
- No iOS mobile wallet. Electrum mobile wallets are designed for Android devices.
- It is a hot wallet. Like all the hot wallets, Electrum can be vulnerable to attack from hackers. To reduce the risk of hacking, developers provide an array of security measures to keep your funds safe.
Electrum Wallet Alternatives
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Emerson Marcelino –
I personally appreciate the security features of this wallet, but I find it confusing and challenging to configure for novice users. The concept of receiving and change addresses can be difficult to understand, and there aren’t enough explanations to clarify how they work. While security is paramount, it’s essential to create more intuitive, straightforward, and functional wallets to encourage mass adoption of Bitcoin.