What is Electrum wallet and how does it work?

Electrum is one of the longest-running bitcoin wallets, used mainly on desktop computers. It is a "light" wallet. Rather than downloading and checking the whole blockchain like a full node, it connects to Electrum servers that do the heavy work, which its documentation says is why startup is nearly instant. The private keys stay on the user's computer or hardware wallet.

How does Electrum wallet work?

Electrum's documentation says its focus is speed, low resource usage and keeping bitcoin simple. When it starts, it creates or opens a wallet from a seed, which works like the backups described in what an HD wallet is, and connects to the server network to learn about the wallet's transactions. The client can also create and sign raw transactions, batch several payments into one, and "freeze" individual addresses so their coins are not spent.

Does Electrum trust its servers?

The documentation answers, in short, "not really". The client never sends private keys to servers. It checks the information servers report using a technique called Simple Payment Verification, and by default it keeps connections to about ten servers, collecting block headers from all of them to spot lagging servers or chain splits. One server, chosen arbitrarily, is the main one that the wallet asks about its own addresses.

That design has a privacy cost. The documentation says the main server can reasonably guess that all the addresses a client asks about belong to one person. Users who want to avoid that can run their own server against their own node, an option covered in how to run a bitcoin node. Other desktop wallets, such as Sparrow, can also connect to private Electrum servers.

Does Electrum support other coins?

No. The documentation says Electrum has never supported any altcoins, only bitcoin. Because the code is free software under a permissive license, there are many forks that support other coins. Electrum says those are separate projects with their own maintainers that it does not review or endorse.

Is Electrum wallet safe to use?

Electrum supports cold storage, watch-only wallets, multisig and most major hardware wallets, per its documentation. Its documentation also has a section on the common ways users lose coins, listing malicious clones of the app, clipboard hijackers, compromised computers and people posing as support. Downloading Electrum only from its official site and verifying the file signature, which the documentation explains how to do, are the main defenses against fake copies. The clipboard risk is explained in what clipper malware is.

This guide explains how the software works and does not rate it against other wallets.