Electrum Wallet: Securing Your Bitcoin – An Expert Review

Electrum Wallet is a well-known Bitcoin wallet renowned for its security, speed, and simplicity. Since 2011, it has been one of the most esteemed and widely used Bitcoin wallets in the cryptocurrency community. Electrum exclusively supports Bitcoin, focusing on providing a lightweight client. This means users do not need to download the entire Bitcoin blockchain to use it, significantly reducing its demand on storage space and processing power.

Advantages and Disadvantages of Electrum Wallet

Advantages

• Easy Setup Across Devices: Setting up Electrum is very straightforward on both computers and Android mobile devices. An installation wizard guides users through the entire process, eliminating the complexity of creating a wallet. After installing the wallet, it can be imported across devices using a 12-word mnemonic phrase.
• Compatibility with Mainstream Hardware Wallets: The wallet supports integration with mainstream hardware wallets, including Ledger Nano S, Trezor, and Keepkey.
• Personalized Security: Electrum allows users to choose between multisignature, 2FA, or standard security options to protect their Bitcoin. Multisignature wallets provide the highest level of security, while standard wallets are ideal for those looking to keep their Bitcoin in a hardware wallet. On the other hand, the 2FA security option is a good middle ground for users seeking quick access to funds as well as an extra layer of security.
• Suitable for Beginners: Sending or receiving BTC, issuing invoices, encrypting messages, checking transaction history, and other in-app functionalities are very simple with Electrum Wallet. If this is your first foray into Bitcoin, Electrum, with its smooth and easy-to-navigate layout, is your best bet.
• Open Source: The wallet’s software is open and available to the public. Users with extensive development knowledge can inspect the code to discover potential bugs or vulnerabilities. Keeping it publicly accessible allows the Electrum core team to identify vulnerabilities and accordingly update the code.

Disadvantages

• Past Security Issues: The wallet has a long history of providing secure storage for Bitcoin. However, in 2018, hackers were able to exploit a vulnerability in Electrum client version 3.3.3 through a very clever phishing attack, resulting in losses of about $750,000.
• Bitcoin Only: Users can only store Bitcoin on Electrum. The wallet has never provided support for any altcoins. However, due to Electrum software being open source, there are many forks of Electrum wallet on the market to support other cryptocurrencies.
• Lack of Customer Support: Despite having a large user base, Electrum does not offer direct customer support. To ask questions, users need to post their queries on the BitcoinTalk forum or Electrum’s social media channels.

Key Features of Electrum Wallet

Electrum is a crypto wallet that allows users to protect their Bitcoin with a password. Users always control their keys, which can be exported and used in other Bitcoin-supporting wallets if desired. If users lose their Electrum wallet file, they can recover their assets using a mnemonic phrase.

In addition to providing security features such as multisignature and cold storage, Electrum wallet also supports hardware wallet integration and is firewall-friendly. Moreover, it does not have a single point of failure, as anyone can run their own server with Electrum. This also means that there are no downtimes if you use Electrum wallet.

The wallet uses the Simple Payment Verification (SPV) method to verify all transactions, eliminating the need for users to download the entire Bitcoin blockchain. It makes Electrum lightweight, allowing users to send and receive BTC quickly. For a better BTC payment experience, Electrum supports the Lightning Network for faster and relatively cheaper Bitcoin transactions.

Security of Electrum Wallet

Electrum wallet is non-custodial. Therefore, users can control and protect their private keys. However, they can utilize additional security features of the wallet. For example, users can choose between 2FA and multisignature to add a layer of protection against hackers or simply integrate their Electrum wallet with a third-party hardware wallet.

Since Electrum was made public, hundreds of independent developers have reviewed it, even contributing over 15,000 commits to the wallet’s software code.

Despite having robust security features, Electrum users still fell victim to phishing attacks, allowing hackers to steal funds through malicious websites. The team later fixed the vulnerability. However, since the wallet does not support automatic updates, users must regularly update the wallet to ensure they are using the latest version.

Privacy and Anonymity

Electrum never stores private keys. Instead, they are stored locally on the user’s device. The wallet encrypts private keys and seed phrases to protect user privacy. To decrypt the wallet file, users must enter a password.

In addition to wallet encryption, Electrum also allows users to run their own server if they prefer privacy. To ensure all servers send correct information, it uses SPV to verify the data reported.

Furthermore, Electrum allows users to make Bitcoin transactions without revealing their identity.

It is a wallet that does not require KYC (Know Your Customer), allowing for anonymous Bitcoin purchases.

How to Setup Electrum Wallet

The entire process of setting up Electrum Wallet is very straightforward. You need to visit their official website and click “Download” to begin the installation process. The wallet provides installation sources and binaries for various operating systems, including Android, macOS, Windows, Linux, and Python.

During the setup process, the wallet will ask you to select the type of wallet you wish to create. You can also choose to import an existing wallet. If you are creating a new wallet, be sure to note down your mnemonic phrase.

Usability of Electrum Wallet

Desktop

The desktop version of the Electrum wallet is simple to use. Although it has a basic Windows 95 feel, it allows users to perform all major functions from the main screen, including sending and receiving Bitcoin, checking transaction history, or creating invoices. If users wish to send Bitcoin at a cheaper rate, it also supports the Lightning Network.

Mobile App

The mobile version of Electrum is currently only available for Android devices. Android users can install it by directly downloading the APK file or from the Google Play store. It is lightweight, offering a good middle ground between usability and security.

Customer Service

Electrum does not have a dedicated customer support team. The wallet has a help section, allowing users to check for regular updates, report bugs, or connect to the official website.

To ask questions, users need to submit their queries to the Electrum community on the BitcoinTalk forum or on social media platforms like X (formerly known as Twitter) and Reddit. Additionally, the wallet has an “Electrum Documentation” page that offers a variety of resources and articles for both beginners and professionals. Users can access this page directly from the wallet.

Costs and Fees

The Electrum software wallet can be run for free on all supported devices and operating systems. Users can download the mobile wallet from the Google Play store and the desktop wallet from the official website.

When sending Bitcoin, the wallet defaults to charging a transaction fee of 0.2 milliBTC (1 mBTC = 1/1000 of a BTC), but users can customize the fee to their liking. This can be done in the advanced settings within the wallet.

Bottom Line

Electrum is one of the most advanced and feature-rich software wallets available. Nearly 15,000 commits on Github, navigable UI and UX, multisignature and 2FA security, as well as support for hardware integration make it an ideal Bitcoin-exclusive wallet.

It might not meet the needs of traders looking for a one-stop shop for multiple crypto assets. However, experienced Bitcoin enthusiasts will surely appreciate the advanced features of the Electrum wallet as well as its integration with the Lightning Network for scalable Bitcoin transactions.