Electrum Desktop wallet

THE BASICS of DESKTOP wallets

A Desktop wallet is a software program which is downloaded and installed on your computer or laptop.   Each computer where you want to use it will need its own copy of the software. There are Desktop wallets for all the main computer operating systems: Windows, Apple, and Linux. A Desktop wallet (and a Web wallet) will usually give you the most options of things you can do with your wallet.  This is a type of software wallet, and also a “hot wallet”.

Some Desktop wallets will allow you to create many independent wallets on the same computer, each with their own unique wallet name, password, seed, keys, addresses, and account balance.  You can create individual wallets for different people who will share the computer, and/or create them for your own accounting purpose.

Some Desktop wallets will also allow you to do things such as: add descriptions to each transaction, calculate capital gains, give you some control over transaction fees (pay higher fees for faster confirmation), allow you to do invoicing of clients, coordinate with Hardware wallets, and use Simple Payment Verification to reduce your need for 3rd party trust.

SECURITY of DESKTOP wallets

Like a Mobile wallet, a Desktop wallet will give you total control over your private keys, and therefore you will really own, and control, all of your coins.  So protect them well.

A Desktop wallet is opened with a password.  Some wallets will allow you to run the software without a password, but this is not advisable since anyone who can log into your computer can easily steal your coins.

You will want to be sure to keep your computer operating system updated, keep your anti-malware updated and scanning frequently, and keep your firewall enabled.

Most Desktop wallets will allow you to set up 2FA “Two-Factor Authentication”.  This means that you will need a secondary confirmation to access your wallet – via SMS message, email message, or smartphone app.

This type of wallet is generally considered more secure than an Exchange wallet, a Web wallet, and a Mobile wallet, as long as proper security precautions are taken.  This is due to the fact that, among other things, this type of wallet is less exposed to attack than those others, you are not relying on someone else to store your keys, and a computer in your home or office is less likely to be stolen then something like a mobile phone.

DON’T LOSE YOUR PRIVATE KEYS, NOR SEED PHRASE, AND DON’T LET OTHERS SEE THEM OR THERE IS A VERY GOOD CHANCE YOUR CURRENCY WILL BE STOLEN.

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BACK UP / RESTORE of DESKTOP wallets

A Desktop wallet will usually include the HD feature which will allow you to back up all your keys via just the Seed phrase. Better Desktop wallets will also allow you to add 1 or more of your own word(s) to the Seed phrase for additional security. If you don’t have the HD feature then you need to back up each and EVERY private key. You will also want to backup your password in case you forget it.

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FEATURE SUMMARY of DESKTOP wallets

Here is a list of features that this type of wallet can and should provide – but not all wallets of this type have all these features:

  • 2FA: “Two Factor (two-step) Authentication”. Requires password PLUS phone or emailed code for better account protection.
  • CAPITAL GAINS: Compute capital gains amount for taxes
  • DESCRIPTION: Allows you to make notes for each send/receive transaction.
  • ENCRYPTED BACKUPS: Allows for exporting your keys and/or Seed phrase, in encrypted form, to your computer.
  • FEE MANAGER: Monitor and control your transaction fees.
  • HARDWARE INTEGRATION: Can interoperate with a hardware wallet for better security.
  • HD: “Hierarchical Deterministic” – Always creates new receive addresses and is easy to back up / recover keys via the Seed phrase.
  • INVOICES: A easy/clickable way to prepare to send money to a receiver who has published their receive address on a website.
  • MULTIPLE WALLETS: Create as many independent wallets as you want on the same computer.
  • OPEN SOURCE: SOME wallets are Open Source.  This means there is a reduced chance of software hacking.
  • QR SCANNER: Good for importing keys from paper wallets.
  • SEED +: One or more extra Seed words that YOU choose which will be added to the wallet’s chosen 12-24 Seed phrase. (for extra security)
  • SPV: Simple Payment Verification to ensure transactions are processed properly with less third-party trust required.
  • WATCH–ONLY: Safely monitor your account balances without exposing your keys.

Here are more exotic features – Basic users may not find them important:

  • FULL NODE: Download entire copy of the blockchain. (For better security.)
  • MULTI–SIG: Requires more than one person to authorize a transaction (good for team security)
  • SPLIT SECURITY MODE: Can coordinate with corresponding off-line / cold (no internet connection) wallet. (For better security)
  • SWEEP: Consolidate currency from previous wallet(s) into a new wallet. (For security and/or new wallets)
  • TOR: For better privacy, may slow down the wallet (Use with care.)

These features are explained in more details here. [Summary of Important Wallet Features]

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PROS / CONS of DESKTOP wallets

The following pros and cons are generalizations of what makes this wallet type uniquely different from most other wallet types.

Pros:

  • NO TRUST: IF you have a full node wallet then you don’t need to trust in a 3rd party to confirm transactions.
  • BACK UP KEYS: Easy to back up all keys to an encrypted local disc file.
  • EXTENSIVE FEATURES: Typically the user interface will give you the most features and will be easy to figure them all out.
  • PRIVATE CONTROL: You will own and control your private keys

Cons:

  • NO COLD STORAGE: There is no (reasonable) way to put these keys into offline cold storage.
  • HOT: Generally always in “hot” online mode (Security risk, but this is also what makes it so convenient to use)
  • NO FIAT: Usually can’t buy and sell coins in exchange for government-issued fiat currency

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EXAMPLE of DESKTOP wallets

One example of a highly regarded Desktop wallet: Electrum wallet

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GET STARTED of DESKTOP wallets

To get started with this type of wallet you can download it from the wallet provider’s website. Then install it on your computer.  Set up your account with a username/password. Make sure your password is a strong one. See our [security tips] for strong password tips.  Then back up your Seed phrase (if provided), and transfer currency into your wallet. This can come from your Exchange wallet, or someone can send currency to you. Then you are ready to start spending.  

DISCLAIMER: Although we have explained how Desktop wallets work, this does not mean that we are certifying that Desktop wallets are safe to use.  We only explain them here because they are a very common type of wallet. Do your own research, follow all security procedures, and use them at your own risk.  

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