How can I use Bitcoin privately with the Electrum wallet and Tor?

Question

I do not want to run a full node like Bitcoin Core but still want privacy running an SPV node like Electrum wallet to use Bitcoin.

How can I setup to run Electrum privately with Tor?

Answer 1

Electrum v3.1.3 and earlier includes a setting to use Tor

When Tor is correctly setup on your system, it is possible to directly configure Electrum to connect via Tor for all connections, both to Electrum servers and, to third-party services.

Using these steps you can be anonymous in only five minutes.

Setting up Electrum and Tor

These instructions work on Fedora 27 and assume a default installation of Electrum v3.1.3 and Tor v0.3.1.10 or newer. Fedora is a modern operating system that will run on most standard modern hardware. The configuration is the same on Windows, but the instructions are different. There are some instructions for setting up Tor on Windows here.

Further instructions for other *nix based systems are available here. NOTE: You do not need to configure your Tor client as a relay or exit node for Tor to operate, so you can skip the step for 'Put the configuration file /etc/tor/torrc place:' in that guide. You will still need to use all of the following steps in this guide.

1. Setup Electrum

   1. Install the Electrum package:

      sudo dnf install electrum
      

   2. Run Electrum. If you start Electrum with the -o offline switch the first time you run it your details don't leak out.

      1. Choose Automatically Connect and click on Next.
      2. Name your wallet if you like or accept the default and click on Next.
      3. Select Standard Wallet and click on Next.
      4. Select Create a new seed and click on Next.
      5. Select Segwit and click on Next.
      6. Securely, privately and accurately store your seed. This is your wallet backup. If it is lost all your BTC is gone permanently. Click on Next.
      7. Type your seed in the box and click on Next to verify you have it correctly.
      8. Set a good password that you will never forget. This must be secure to ensure your wallet cannot be stolen. Click on Next.
      9. Your wallet is setup.

2. Setup Tor

   1. Install the tor package:

      sudo dnf install tor
      

   2. Start the tor daemon and make sure it starts at boot:

      sudo systemctl enable tor
      sudo systemctl start tor
      

3. With Electrum setup and running:

   1. Go to Tools -> Network
   2. Click on the Proxy tab
   3. Place a tick for Use Tor proxy at port 9050
   4. Note that Electrum will momentarily disconnect and reconnect via Tor
   5. Click on Close
   6. Exit and restart Electrum normally (to go online)
   7. Check that your password works and that you remember it before you use your wallet.
   8. Look for the icon to turn turquoise indicating that you are online. You can click it to check status.

Done! Enjoy being anonymous!

Appendix 1 - Monitoring Tor

You can monitor (and further tweak/break) Tor using nyx.

There are several installation methods available. On Fedora 27:

sudo dnf install nyx

To start nyx simply type nyx in the console and it will connect to Tor if it is running. Requires control port 9051 to have been uncommented in /etc/tor/torrc.

Footnotes

There are more configuration options available, and additional ways you can support the Tor network. Please see the several pages available here for information.

*by default, Tor will participate in the Tor network.