How to create a Cold Storage Electrum wallet (that is with a private key offline and secure)
- an expendable computer, i.e. a computer that will not be connected to the internet anymore after the download of Electrum;
- a normal computer, for everyday use;
- a USB flash drive;
- 2 sheets of paper and a pen
Download Electrum on the expendable computer from this address: https://electrum.org/#download but WITHOUT STARTING THE PROGRAM!!
Once electrum is downloaded, disconnect the computer from the internet. From this moment on, the computer shall not be connected for any reason, not even for a second.
Start Electrum and choose “Auto connect” between the choices to connect to a server.
As “Electrum wallet” you can leave “default_wallet”.
Leave “Standard wallet” selected in the next screen.
WHAT FOLLOWS IS THE MOST IMPORTANT PART OF THE WHOLE PROCEDURE.
Select “Create a new seed” and then “Segwit”. The Seed will now appear. The seed is a sequence of 12 words that will allow you, in any time, to recreate the wallet and recover your Bitcoin, even if the computer you’re using should be lost or destroyed.
WRITE THE SEED ON THE TWO SHEETS OF PAPER, BY HAND, WITHOUT USING THE PRINTER AND WITHOUT USING THE COPY AND PASTE FUNCTION. KEEP THE TWO SHEETS OF PAPER IN TWO DIFFERENT HOUSES, AS A HOUSE CAN BURN DOWN OR BE FLOODED. LOSING YOUR SEED IS EQUIVALENT TO LOSING YOUR BITCOIN.
IF THE SEED HAS BEEN COPIED AND SECURED WE CAN PROCEED INSERTING IT IN THE CONFIRMATION WINDOW. In the subsequent window, we will be asked to insert the seed. This must be typed by hand, because the copy and paste functions are disabled as a security precaution. Insert the seed copying it from the sheets you have just written and proceed. Just to make sure to have driven the point home: the Seed is fundamental to recover the Bitcoin in any case. Pay maximum attention to its storage.
Insert a password to encrypt the wallet. If this password is forgotten, the wallet can be regenerated anyhow, thanks to the seed. It’s always best to choose a complex password.
Now the offline wallet is set up. Now you must generate the public key that you will use on the online computer for all the rest. To do that, click on the “Wallet” menu and select “Information”.
You will see a string of letter and numbers starting with zpub. This string must be copied and pasted in a txt document that will be saved on the USB flash drive. The string will be used on the everyday use computer, the one that will be connected online.
You can turn off the offline computer. The USB flash drive with the public key can be removed.
Download and install Electrum on the normal computer, the one connected on the internet. Select “Auto connect” in the first screen, “default_wallet” in the second and “Standard wallet” in the third.
In the forth screen, select “Use public or private keys”.
Insert the public key that you have saved on the USB flash drive.
Now the online wallet has been set. You will get a warning about this wallet being “watching-only”. This means that the wallet can’t send transactions, but only receive payments. That is correct: this wallet lacks the key for the signature that is stored in the offline computer.
To send Bitcoins, you need to create a transaction on the online computer, clicking on “Send”, inserting the address you need to send the Bitcoins to and the amount to pay. You also need to select the fees for the miner, according to the needed speed of the transaction. After that, you can click on “Preview”.
The transaction cannot be signed. That’s why the “Sign” button is disabled. For this reason, the transaction needs to be saved and put on the USB flash drive.
- Start Electrum on the offline computer, insert the USB flash drive, and load the saved transaction clicking on “Tools” -> “Load transaction” -> “From File”.
- Electrum will realize this is a transaction needing a signature and will prompt you to do so. Sign the transaction and then save it again on the USB flash drive. Now you need to insert the USB flash drive in the online computer and load the signed transaction (again from “Tools” -> “Load transaction” -> “From File”) and click on “Broadcast”, once loaded.