Electrum: Everything to Know
By Beluga Research August 1, 2023
- Electrum is a secure and lightweight bitcoin wallet that provides users with fast and reliable transactions
- It operates as a simplified payment verification (SPV) wallet, reducing storage and bandwidth requirements
- The wallet is available on multiple platforms, including Windows, macOS, Linux and Android
- Electrum features an intuitive user interface suitable for both beginners and experienced users
Electrum is a secure, lightweight bitcoin wallet that provides users with a fast, reliable way to send, receive and store bitcoin. Unlike full-node wallets that require users to download the entire blockchain, Electrum operates as a simplified payment verification (SPV) wallet. This means that it verifies transactions by connecting to remote servers that have a full copy of the blockchain, reducing the storage and bandwidth requirements for users.
The wallet is available for multiple platforms, including Windows, macOS, Linux and Android, making it accessible to a wide range of users. Its user interface is intuitive and straightforward, and it can be an ideal choice for those new to cryptocurrencies. Despite its lightweight nature, Electrum offers advanced features and customization options for experienced users, making it a versatile wallet solution.
A Brief History
Electrum was first released in November 2011 by Thomas Voegtlin, a German computer scientist. It was one of the early bitcoin wallets and quickly gained popularity due to its simplicity and focus on security. The name "Electrum" is derived from the naturally occurring alloy of gold and silver, symbolizing the wallet's aim to strike a balance between usability and robustness.
Over the years, Electrum has undergone several updates and enhancements to improve its functionality and security. It has established itself as a reliable and trusted wallet in the cryptocurrency community, with a strong emphasis on user privacy and control over funds.
What is Electrum?
- Installation and setup. Installing Electrum is a straightforward process. Download the appropriate version for an operating system from the official website and proceed with installation. Upon launching a wallet, users are guided through the setup process. This involves creating a new wallet or restoring an existing one from a seed phrase.
- Wallet types. Electrum offers different types of wallets to cater to various user preferences. Standard wallets are encrypted and can be protected with a password. Multisig wallets, on the other hand, require multiple signatures to authorize transactions, enhancing security for shared accounts or group funds. Additionally, there is also a "watch-only" wallet option, which allows users to monitor balances and transactions without the ability to spend funds.
- Security features. Electrum incorporates several security features to safeguard user funds. One notable feature is the ability to create a wallet with a seed phrase. This seed phrase consists of a series of words that can be used to restore the wallet on any compatible device. Electrum also supports hardware wallets, such as Trezor and Ledger, providing an extra layer of protection by keeping private keys offline.
- Transaction handling. Electrum offers a range of transaction management features. Users can set custom transaction fees to prioritize transactions based on network congestion. It also supports the creation of batch transactions, enabling users to send funds to multiple recipients in a single operation. For added privacy, Electrum can utilize the technique of "coin mixing" or "coin tumbling," which helps obfuscate the origin of funds by combining them with those of other users.
- Plugin support. Electrum supports a plugin system that allows users to extend a wallet's functionality. Plugins can provide additional features, such as integration with third-party services or enhanced privacy options. Users can choose from a variety of plugins available in the Electrum ecosystem or even develop their own to tailor the wallet to specific needs.
To start using Electrum, download and install the wallet software on a computer or mobile device. Electrum is available for various operating systems, including Windows, macOS, Linux and Android. Once the software is installed, create a new wallet or import an existing one.
When creating a new wallet, Electrum generates a unique seed phrase consisting of 12 or more words. This seed phrase is crucial for wallet recovery and should be kept in a safe and secure location. It is recommended to write down the seed phrase on a piece of paper and store it offline. With the seed phrase, it is possible to restore a wallet on any compatible device if the original device is lost, damaged or stolen.
After setting up a wallet, start receiving and sending bitcoin. To receive bitcoin, you simply provide the sender with a wallet address, which is a long string of alphanumeric characters. To send funds, enter a recipient's address and the amount to send.
One of the key features that sets Electrum apart from other wallets is its focus on speed and efficiency. Electrum utilizes a technology called Simple Payment Verification (SPV), which allows a wallet to synchronize with the blockchain quickly. Unlike full-node wallets that require downloading an entire blockchain, Electrum only needs to download a small portion of the bitcoin blockchain, making it much faster to set up and use.
Additionally, Electrum offers users the option to connect a full node for enhanced privacy and security. By running a full node, users can validate transactions and rely less on third-party servers. This feature aligns with the decentralized nature of cryptocurrencies and empowers users to have greater control over funds.
Another unique aspect of Electrum is support for hardware wallets, which are physical devices to store cryptocurrency keys offline, providing an extra layer of security. By integrating with hardware wallets such as Trezor or Ledger, Electrum allows users to manage funds securely while enjoying the convenience of a software wallet.
Furthermore, Electrum offers advanced features for experienced users, including support for multi-signature wallets. With multi-signature wallets, multiple private keys are required to authorize transactions, adding an extra layer of security and enabling shared control over funds. This feature is particularly useful for businesses or individuals who want to manage funds collaboratively or implement additional security measures.
- Security. Electrum offers a high level of security to its users. It utilizes a hierarchical deterministic (HD) wallet structure, which means that a unique seed phrase is generated to derive all the private keys. This makes it easier for users to back up and restore wallets. Additionally, Electrum supports multi-signature wallets, allowing users to add an extra layer of security by requiring multiple signatures to authorize transactions.
- Privacy. Electrum provides users with a certain degree of privacy. It does not require users to provide personal information during the wallet creation process. Moreover, Electrum allows users to connect a full node, which enhances privacy by preventing third parties from linking the user's IP address to transactions.
- Compatibility. Electrum is compatible with multiple operating systems, including Windows, macOS and Linux. This cross-platform compatibility makes it accessible to a wide range of users, regardless of preferred operating system.
- Speed. Electrum is known for fast and efficient performance. Since it connects to a network of servers rather than syncing with an entire blockchain, it can quickly retrieve transaction history and calculate balances. This makes Electrum an excellent choice for users who prioritize speed and efficiency.
- Customization . Electrum offers a range of customization options to suit individual user preferences. Users can choose between different fee levels for transactions, allowing priority speed or cost-effectiveness. Additionally, Electrum supports the integration of third-party plugins, enabling users to enhance the functionality of their wallets with additional features.
- Centralization. While Electrum provides users with the option to connect to a full node, the default setup involves connecting to a network of servers maintained by Electrum. This introduces a certain level of centralization and reliance on these servers. If the Electrum servers experience downtime or are compromised, it could temporarily affect the availability and functionality of a wallet.
- Beginner unfriendliness. Electrum may not be the most user-friendly wallet for beginners. Its interface and features can be overwhelming for users who are new to cryptocurrencies. The advanced customization options and technical terminology may pose a challenge for those who are still learning the basics of cryptocurrency wallets.
- Limited cryptocurrency support. While Electrum supports bitcoin, it does not support other cryptocurrencies.
- Reliance on servers. When using Electrum, users rely on computer servers to provide transaction information and other data. While this allows for faster performance, it also means that users are dependent on the availability and reliability of these servers. If the servers are overloaded or experience technical issues, it could impact the user experience.