Electrum Personal Server

Electrum Personal Server aims to make using Electrum bitcoin wallet more secure and more private.

It is an implementation of the Electrum server protocol which fulfills the specific need of using the Electrum wallet backed by a full node, but without the heavyweight server backend, for a single user. It allows the user to benefit from all of Bitcoin Core's resource-saving features like pruning, blocksonly and disabled txindex. All of Electrum's feature-richness like hardware wallet integration, multisignature wallets, offline signing, mnemonic recovery phrases and so on can still be used, but connected only to the user's own full node.

Full node wallets are important in bitcoin because they are an big part of what makes the system be trustless. No longer do people have to trust a financial institution like a bank or paypal, they can run software on their own computers. If bitcoin is digital gold, then a full node wallet is your own personal goldsmith who checks for you that received payments are genuine.

Full node wallets are also important for privacy. Using Electrum under default configuration requires it to send all your bitcoin addresses to some server. That server can then easily spy on you. Full node wallets like Electrum Personal Server would download the entire blockchain and scan it for the user's own addresses, and therefore don't reveal to anyone else which bitcoin addresses they are interested in.

Before Electrum Personal Server, there was no easy way to connect a hardware wallet to a full node.

For a longer explaination of this project, see the mailing list email and bitcointalk thread. See also the Bitcoin Wiki pages on full nodes.

How To

• If you dont already have them, download and install python3 and Bitcoin Core version 0.16 or higher. Make sure you verify the digital signatures of any binaries before running them, or compile from source. The Bitcoin node must have wallet enabled, and must have the RPC server switched on (server=1 in bitcoin.conf).

• If you dont already have it, download and install Electrum bitcoin wallet, and set up your Electrum wallet (for example by linking your hardware wallet). To avoid damaging privacy by connecting to public Electrum servers, disconnect from the internet first or run Electrum with the command line argument --server localhost:50002:s.

• Download the latest release of Electrum Personal Server or clone the git repository. Enter the directory and rename the file config.cfg_sample to config.cfg.

• Edit the file config.cfg to configure everything about the server. Add your wallet master public keys or watch-only addresses to the [master-public-keys] and [watch-only-addresses] sections. Master public keys for an Electrum wallet (which start with xpub/ypub/zpub) can be found in the Electrum client menu Wallet -> Information.

• Run ./server.py on Linux or double-click run-server.bat on Windows. The first time the server is run it will import all configured addresses as watch-only into the Bitcoin node, and then exit. If the wallets contain historical transactions you can use the rescan script (./rescan-script.py or rescan-script.bat) to make them appear.

• Run the server again which will start Electrum Personal Server. Tell Electrum wallet to connect to it in Tools -> Server. By default the server details are localhost if running on the same machine. Make sure the port number matches what is written in config.cfg (port 50002 by default).

A guide for installing Electrum Personal Server on a Raspberry Pi can be found here.

Pro Tip: run Electrum wallet with the command line arguments --oneserver --server localhost:50002:s. This stops Electrum connecting to several other servers to obtain block headers; and locks Electrum to connect only to your server, disabling the GUI button to stop accidental connections. This helps avoid a user accidentally ruining their privacy by connecting to public Electrum servers.

Electrum Personal Server also works on testnet and regtest. The Electrum wallet can be started in testnet mode with the command line flag --testnet or --regtest.

Exposure to the Internet

Other people should not be connecting to your server. They won't be able to synchronize their wallet, and they could potentially learn all your wallet addresses. They should also not be packet sniffing the connection because it is not encrypted securely.

By default the server will accept connections only from localhost so you should either run Electrum wallet from the same computer, or use an encrypted SSH tunnel from another computer, or use the IP address whitelisting feature to connect over your own LAN.

How is this different from other Electrum servers ?

They are different approaches with different tradeoffs. Electrum Personal Server is compatible with pruning, blocksonly and txindex=0, uses less CPU and RAM, is suitable for being used intermittently rather than needing to be always-on, and doesn't require an index of every bitcoin address ever used. The tradeoff is when recovering an old wallet, you must to import your wallet first and you may need to rescan, so it loses the "instant on" feature of Electrum wallet. Other Electrum server implementations will be able to sync your wallet immediately even if you have historical transactions, and they can serve multiple Electrum connections at once.

Traditional Electrum servers inherently are not very scalable and use many resources which push people towards using centralized solutions. This is what we'd like to avoid with Electrum Personal Server.

Definitely check out implementations like ElectrumX if you're interested in this sort of thing.

Project Readiness

This project is in beta release. It should be usable by any reasonably-technical bitcoin user.

When trying this, make sure you report any crashes, odd behaviour, transactions appearing as Not Verified or times when Electrum disconnects (which indicates the server behaved unexpectedly).

Caveat about pruning

Electrum Personal Server is fully compatible with pruning, except for one thing. Merkle proofs are read from disk. If pruning is enabled and if that specific block has been deleted from disk, then no merkle proof can be sent to Electrum which will display the transaction as Not Verified in the wallet interface.

One day this may be improved on by writing new code for Bitcoin Core. See the discussion here.

Further ideas for work

• It would be cool to have a GUI front-end for this. So less technical users can set up a personal server helped by a GUI wizard for configuring that explains everything. With the rescan script built-in.

• An option to broadcast transactions over tor, so that transaction broadcasting doesn't leak the user's IP address.

• The above mentioned caveat about pruning could be improved by writing new code for Bitcoin Core.

Contributing

This is an open source project which happily accepts coding contributions from anyone. Please keep lines under 80 characters in length and ideally don't add any external dependencies to keep this as easy to install as possible.

Donate to help make Electrum Personal Server even better: bc1q5d8l0w33h65e2l5x7ty6wgnvkvlqcz0wfaslpz or 12LMDTSTWxaUg6dGtuMCVLtr2EyEN6Jimg.

I can be contacted on freenode IRC on the #bitcoin and #electrum channels, by email or on twitter.

My PGP key fingerprint is: 0A8B 038F 5E10 CC27 89BF CFFF EF73 4EA6 77F3 1129.

Media Coverage

• https://bitcoinmagazine.com/articles/electrum-personal-server-will-give-users-full-node-security-they-need/