Electrum supports a number of different types of wallets:
- Standard wallet: A deterministic wallet with a single private key behind each address. Most users are fine with standard wallets. If you don’t know which wallet type you want then this is the one to go with.
Multisig wallet: In a multisig wallet each address requires more than one private key to spend.For example you can install Electrum on more than one device and on each device you will have a different seed. To spend money you’ll need to use those multiple devices to sign the spending transaction.Alternatively the different seeded wallets can be owned by different people and some or all of them must cooperate to spend from the wallet.
When creating a multisig wallet you can decide the number of participants who are called co-signers in the lingo. You can also choose how many of the co-signers must cooperate to sign transactions.
Multisig wallets are more secure than single key standard wallets because you need access to multiple devices or the cooperation of multiple people to spend bitcoins.
- 2FA wallet: A two-factor authentication wallet is a type of multisig wallet where you need the cooperation of a third party co-signer company called Trusted Coin to spend your money. Trusted Coin will sign your transactions only if you enter the correct google authenticator code for your wallet. So this arrangement provides you with greater security than a single key standard wallet because an attacker would not only need access to your wallet file but also to the google authenticator code on your phone.
- Imported private key wallets: These are wallets created using private keys generated by other software. For example wallets created using paper wallet private keys. See importing private keys.
- Watch-only wallets: Watch-only wallets are wallets with no private keys, or their precursor seed, in them. You can’t spend from watch-only wallets. You can only watch transactions and balances of addresses in that wallet. Electrum allows you to create two types of watch-only wallets. You can learn more about watch-only wallets here.