• How Good is the Electrum Wallet

    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.

    Advantages

    • Perfect for those who want to use Bitcoin to make regular payments.
    • Password protection makes it harder for hackers to get into Electrum wallet.
    • Instantly on - users don’t need to download the whole blockchain. The 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 number 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 by quite a bit.
    • Users can use two-factor authentication with an Electrum wallet. This also adds extra security to the wallet.

    Disadvantages

    • Although it features lots of extra security features, Electrum is still a hot wallet. This means that all of the issues that affect hot wallets are applied to it. It is possible for hackers to get into individual Electrum wallets.
    • It 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.

    Security Overview

    The 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 (read: cold wallet).

    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 decentralized 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.