Ultimate n00b guide to Bitcoin client installation and security/cold storage!

I previously submitted a thread which you can find here with a video tutorial to use the very robust Armory bitcoin client.
But for this submission I will provide the instructions to use Electrum BTC client which provides “Instant on” (your client does not download the blockchain, it uses a remote server).
This will show you how to configure a “watch-only” seedless wallet so that you can receive payments and see your balance on a computer you connect to the Internet with while ensuring that a hacker cannot spend your coins without first “approving” signing the transaction using an OFFLINE computer which you can then return to your online computer and broadcast on the network. If you’re confused, don’t worry, just follow along.
Get an offline computer. This can be a physical device or a separate installation on your current computer. Security tip: Here’s one method on how to disable USB auto run on your offline computer, so that a malware infected USB drive cannot spread its infection.
[Offline PC] Install Electrum via a USB-Key. Here is the download link.
[Offline PC] Create a new wallet. Write down the seed and memorize it, after which you should probably destroy the seed or keep it safe in a fire/waterproof lockbox. Password encrypt your wallet using a passphrase created using diceware for upmost security.
[Offline PC] Import/Export and copy your “Master Public Key” and put it in a text file on your USB-Key.
[Online PC] Install Electrum and select Restore in the dialog box shown on the first start up, use the “Master Public Key”.
You now have an online wallet where you can check your balances and give out new addresses, but you can’t however spend the coins. So if an attacker would be able take over your online computer your coins can’t be lost.
To make a transaction (to spend your Bitcoins) do the following:
[Online PC] Go to the send tab and make a transaction. Instead of sending it, Electrum will detect a seedless wallet and query for a location to save the transaction. Select your USB-Key.
[Offline PC] Go to Settings -> Import/Export -> “Load raw transaction”. Select your transaction from the USB-Key. It will detect it’s not signed and will prompt you to do so now. Fill in your password and sign the transaction. Save the new, signed, transaction to your USB-Key.
[Online PC] Go to Settings -> Import/Export -> “Load raw transaction”. Select the signed transaction and it will ask you if you want to broadcast it.
Hope you all found this helpful 🙂 Also if you are uber n00b please take the time to check out the FAQ which is also found on the right hand side of this blog.

1 thought on “Ultimate n00b guide to Bitcoin client installation and security/cold storage!”

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