Electrum provides enhanced security through Two-Factor Authenticated (2FA) wallets. This feature adds an extra layer of protection by involving a remote server in the transaction signing process. This safeguard is particularly valuable if your computer is ever compromised.
How it works:
- While two-factor authentication significantly increases security, it also adds a step to the transaction process and introduces a dependency on the TrustedCoin service.
- When you initiate a transaction, a remote server must approve and co-sign it along with your local signature.
- To complete a transaction, you’ll need to provide your usual wallet credentials and an additional verification step through the TrustedCoin service.
- This system ensures that even if an attacker gains access to your computer, they can’t spend your funds without also compromising the second factor.
- Enabling Two-Factor Authentication requires some initial configuration in your Electrum wallet settings.
TrustedCoin provides the remote server for two-factor authentication. For detailed information on its operation, refer to the guide.
Creating a Wallet
Restoring from seed
The TrustedCoin service enhances your wallet’s security, but your coins remain safe even if this service fails. Your wallet’s seed contains two master private keys, which are part of a 2-of-3 security setup. The seed also allows you to derive the third master public key. This means you can always recover your wallet addresses using just your seed.
To restore your wallet from the seed, you must select the “Wallet with two-factor authentication” option in Electrum. This option tells the software to use the special seed format associated with this security setup.
Remember to keep your seed secure and private. It’s the key to recovering your wallet and accessing your coins, regardless of TrustedCoin’s status.
Important: Use the “restore” option with caution. Only choose this option if you want to stop using TrustedCoin or if the service is experiencing issues. When you restore your wallet this way, two out of three security factors will be stored on your device. This change reduces the special protection that a two-factor authentication wallet provides.
By restoring in this manner, you’re shifting from a distributed security model to a more centralized one. This means your wallet’s security will depend more heavily on the safety of your personal device.