Malware Free Computer is Essential
Before you install your own Bitcoin Wallet, please make sure the Operating system on your Device is fully up to date. If you are using Windows, this is done using Windows update. You should also have an Internet Security tool, such as Bullguard Internet Security, or Bitdefender Total Security. Malware, such as key loggers can compromise a Computer or Smartphone, so an Internet Security Tool is essential.
First, we need to select and download our Wallet from a trustworthy location. Bitcoin.org is a great site for this. It holds reviews of all the most popular wallets, and the links to download Wallets can be trusted. On Bitcoin.org, simply click on “Getting Started with Bitcoin” then “Choose Your Wallet”. Take your time to browse this area, and compare Wallets to find the ones that are right for you. Installing more than one Wallet from different manufacturers offers added security, by spreading your Bitcoins across multiple Wallets. If a security flaw appears in one Wallet, the others should not be affected. You could use one Wallet for day to day transactions, and one or more Wallets for savings. Some Wallets, such as Bitcoin Core, will actually download a copy of the entire BlockChain Public Ledger onto your Computer as part of the Installation process. Other Wallets don’t need to do this, instead using Servers on the Internet to access the Blockchain. As I record this in February two thousand eighteen, the BlockChain is currently one hundred and fifty gigabytes in size, and it gets larger every day.
Depending on your Internet connection, a full download could take several days. If you select a Wallet for your Desktop or Laptop Computer that downloads the entire Blockchain file, you will need an Internet connection and sufficient disk space for this. If you don’t like the idea of downloading the entire one hundred and fifty gigabyte BlockChain Public Ledger to your own Computer, just select a Wallet that uses Servers on the Internet to access the Blockchain. A popular Wallet that doesn’t download the entire BlockChain Public Ledger, but instead connects to the BlockChain through trusted public servers on the Internet, is called “Electrum”. The Electrum Wallet has been around for several years and is very popular. To download Electrum simply click on the “Visit Website” button to visit the official Electrum website. Click on Download, and then select the correct version for your Computer. If you are using a Windows PC, then either the Standalone, or the Windows Installer downloads will work just fine.
Installing an Electrum Wallet
When the installation file is downloaded, simply open it to begin. On the Electrum Wallet screen, give your Wallet a name that you will recognize. You can run the installer more than once, to create multiple Electrum Wallets on the same device, such as Bob’s Daily Wallet, and Bob’s Savings Wallet. Next, we have several Wallet Types to choose from.
Standard Elecrum Wallet
With a Standard Wallet, a single security key protects your bitcoins. However, if your computer is compromised with malware such as a keystroke logger, it is possible for your key to be stolen. This is why we recommend that you always have a good Internet Security Tool to protect against Malware.
Two Factor Authentication Wallet
A more secure option is the two-factor authentication Wallet. With two-factor authentication, your computer cannot spend your bitcoins without you first entering a random Google Authenticator code sent directly to your cell phone, which is linked to your Wallet. This gives significantly increased security, so we are going to select this option. There are two other options available, which I’ll briefly explain.
A multi-signature wallet creates two separate Wallets, usually on separate computers. These Wallets can be controlled by two separate people, who must act together, in order to access Bitcoins in the shared Wallet. Both wallets also use the same set of Bitcoin Addresses. A Multi-Signature Wallet functions like a co-signature joint Bank Account, meaning no one person can spend Bitcoins on their own.
Import Bitcoin Addresses or Private Keys
“Import Bitcoin Addresses or Private Keys” is used to import either a Cold Storage, or another Digital Wallet. This can also be accomplished by scanning the imported Wallet’s QR code. You can also use Electrum, to make a Cold Storage Wallet, which you can store on a USB Thumb Drive, or a hardware device such as the Trezor or Nano S Bitcoin Wallet.
Back to our installation, with two-factor authentication selected, we simply click on next. We now come to the beginning of life for all Bitcoin Wallets, called the “seed”. The Seed is a long set of random words. These are used to encrypt your Wallet, and generate your Private Key that authorizes transactions leaving your Wallet. The Seed is also required to restore a Wallet that has been lost, stolen, or destroyed. The Seed can rebuild your Wallet from backup files, or for some types of Wallets, called “Blockchain Wallets”, from information held on the Blockchain itself. Keep the “Seed” secret and secure, and separated from your device. If anyone found out what your Seed was, they could steal your Wallet. When we click through to the Seed page, we can accept the random words given, or we can select our own random words.
Wallet Recovery Information – Keep hard copies and secure!
Whichever words you choose for your Seed, write them down, print them, or store them in a text file. Keep this in a secure location, totally isolated from your Computer or Smartphone. Please don’t be tempted to simply copy your Seed into a text file, and keep this on the same Computer that stores your Wallet. Many people have lost their Bitcoin Wallets doing exactly this. If you print out the seed words, do this only from a printer that is directly connected to your computer. If you use a USB thumb drive, use more than one high quality drive to store the seed, in case of hardware failure. We do recommend that the seed is written on paper somewhere, and stored securely, as all hardware can fail. Next, to make sure that you really do know what your Seed key is, Electrum will ask you to retype it.
Wallet Password – Lose it – lose your Wallet.
Next, we have a password to keep secure. This password will be required whenever you want to open your Wallet. Make this memorable, but not easy for anyone else to guess. If you forget your seed, password or PIN, it’s usually impossible to recover them.
Security in Bitcoin is Everything!
You must store these very securely! Many people have lost all of their Bitcoins by simply forgetting this crucial security information. So, safeguard and store all of this information securely!
Testing your Electrum Bitcoin Wallet
In this next step, as we selected two-factor authentication for our Wallet, we need to scan the QR code using Google Authenticator on our cellphone. Google Authenticator will then return a six-digit code, which must be entered into this screen. Once that is done, your cellphone will be linked to your Bitcoin Wallet. And every time Bitcoins are sent from your Wallet, a random Google Authenticator code, sent to your linked Cellphone must be entered to authorize it. To test our Wallet, simply open the Electrum Application, and select our Wallet, then enter the Password we created during the installation. And we’re done!