When you secure your Bitcoin wallet using a hardware wallet, such as a Ledger or Trezor, you need software on a computer to manage your funds. By default, many users opt for software provided by the manufacturer, such as Ledger Live or Trezor Suite. While these options are convenient for beginners, other more sophisticated software exists. In this article, we show you in detail one of the most complete Bitcoin wallet management software: Sparrow Wallet.

What is Sparrow Wallet?

Sparrow Wallet is a Bitcoin wallet management software designed for computers. It can be used to create a Bitcoin wallet directly on the computer, which is called a “hot” wallet. However, it is also possible to use it to manage a “cold” wallet, whose keys are kept on a hardware wallet such as Ledger or Trezor. In this configuration, Sparrow Wallet replaces software like Ledger Live or Trezor Suite for managing the wallet, constructing transactions, and generating receiving addresses. It is this configuration that we will study in the tutorial.

Why use Sparrow Wallet?

Sparrow Wallet is particularly used by bitcoiners. But why is this software so popular, especially compared to the solutions offered by hardware wallet manufacturers such as Ledger Live or Trezor Suite?

First, Sparrow is exclusively dedicated to Bitcoin. If your hardware wallet is only used for BTC, you don't need the altcoin features offered by Ledger Live or Trezor Suite. Conversely, Sparrow offers a range of advanced features specifically for Bitcoin, making it one of the most complete software for managing your wallet.

Then, its use is very intuitive thanks to a refined graphical interface.

Finally, Sparrow Wallet is compatible with most hardware wallets on the market, which allows you to centralize the management of several Bitcoin wallets on a single software.

How do I install the Sparrow Wallet software?

Go to the official website on the page Download : https://sparrowwallet.com/download/.

Choose the software to download based on your operating system.

Before installing it, I advise you to verify its authenticity and integrity using the checksum and public keys provided by the developers. This ensures that the downloaded software is official and not compromised.

How do I set up Sparrow Wallet?

At the first launch, the software will give you information on how it works. You can pass them.

Now that Sparrow Wallet is installed on your PC, it will need to be able to communicate with a Bitcoin node to know the status of the blockchain and find your transactions. To do this, you have 3 different options:

• The public server (yellow);
• The Bitcoin Core node (green);
• The Electrum private server (blue).

If you are just starting out and do not yet have your own Bitcoin node, you can use Sparrow Wallet by selecting a public server from those offered in the list.

The option Bitcoin Core allows you to connect Sparrow Wallet to your own Bitcoin Core node installed locally on your computer. If you have one, you can link to it by entering its details here.

➤ Learn how to set up a Bitcoin Core node.

Finally, the option Private Electrum allows you to connect to a Bitcoin node remotely. If you have set up a Bitcoin node on a Raspberry Pi or on another computer, using node-in-box solutions such as Umbrel, you can establish the connection to your Sparrow Wallet via this option.

If you don't have a Bitcoin node yet, select the option Public Server. Then choose a server from the dropdown list and click Test Connection. If the connection is successful, a green check mark should appear.

Finally, you can go to the tab General to customize Sparrow Wallet settings. I recommend that you keep the default settings, except for the currency, which you can change to euros.

How do I register my Bitcoin wallet on Sparrow?

In this tutorial, I show you how to set up Sparrow Wallet to work with a hardware wallet, such as Ledger or Trezor. Make sure you have your device and its cable handy to connect it to your computer.

In this part, we are going to record in Sparrow what we call the” Keystore ” of your wallet, hosted on your hardware wallet. More specifically, we will import the public keys and your wallet settings to Sparrow, but the private keys will remain exclusively stored on your hardware wallet. On your Sparrow software, you will only be able to consult your balance, track your transactions and build new ones, but you will always need to have your hardware wallet to sign transactions, as the private keys are stored exclusively on it. It also implies that you have already created your wallet with its mnemonic phrase before.

➤ Learn how to create a wallet on a Ledger.

➤ Learn how to create a wallet on a Trezor.

To sync your wallet, click on the button Create New Wallet.

Choose a name for this wallet. In my case, I am synchronizing a blue Ledger, so I will call it “Blue Ledger”. Then click on Create Wallet.

On this new page, start by selecting the type of script used for your portfolio. If you have already received bitcoins on this wallet, you must choose the same type of script that was used when creating it. In case of doubt, you can check in your old portfolio management software the format of the addresses used (single-signature wallet):

• The addresses” bc1p... ” correspond to Taproot;
• The addresses” bc1q... ” correspond to Native SegWit;
• The addresses” 3... ” correspond to Nested SegWit;
• The addresses” 1... ” correspond to Legacy.

If you have never received bitcoins on this wallet before, you can choose the type of script you want. I advise you to opt for Taproot.

You can now plug your hardware wallet into your computer and unlock it using its PIN code. Then click on the button Connected Hardware Wallet.

Click on Scan...

You should then see your device appear. Attention, for some hardware wallets such as Ledgers, the Bitcoin application on the device must be installed and open at the time of the scan.

Then click on the button Import Keystore to save your wallet's public keys on Sparrow.

On the configuration page, you now see the xpub of your wallet as well as the fingerprint of the master key. If everything suits you, click on the button Apply.

Sparrow will then ask you to choose a password. This is only used to lock access to your Sparrow wallet on your computer. It is important to note that this password does not give access to your bitcoins and that it will not be necessary to recover your wallet via the 12 or 24 words of the mnemonic phrase. So you can, for example, save it in a password manager. Once the password has been entered, click Set Password.

Congratulations, your wallet is now imported into Sparrow! If you click on the tab Transactions, you should see past transactions made with this wallet. If your transactions do not appear, you may have made a mistake in choosing the type of script. In this case, you can start setting up your wallet again by selecting the appropriate script type.

How do I receive bitcoin on Sparrow Wallet?

To receive bitcoins in your wallet, click on the tab Receive.

Sparrow will then show you the first unused address in your wallet. You can copy it, or scan the associated QR code. To enlarge the QR code, simply click on it.

Before receiving funds to this address, you can add a tag to it in the field Label. This will help you identify where the funds are coming from in the future. For example, if you use this address to transfer your bitcoins from the Bitstack application, you can label it” Bitstack withdrawal ”.

Before using this address, it is important to check it on the screen of your hardware wallet. This is a good practice that ensures that the address belongs to your wallet hosted on the device. Click on the button Display Address. The address should then appear on your hardware wallet. Make sure it matches the one shown on Sparrow.

If all is well, you can use this address to receive bitcoin. Once the payer's transaction is broadcast on the Bitcoin network, you will see it appear in the tab Transactions.

If you want to change the label associated with this transaction, simply double-click on it.

By clicking on the tab Addresses, you will have access to a list of all your receiving addresses, as well as the labels you have assigned to them. Addresses marked with an arrow indicate that they have already been used to receive funds, but that these bitcoins have been spent.

By clicking at the column level Label, you can change a label.

The exchange addresses, which are used to receive the portion of your bitcoin that is not consumed in a transaction, are just below.

By clicking on the tab UTxOS, you'll see a list of all of your bitcoin coins, along with their value.

How do I send bitcoin with Sparrow Wallet?

Now that you've received your first bitcoins in your wallet managed by Sparrow, you can also consider spending them. For that, you have two options. The first is to click directly on the tab Send.

Or, you can go to the tab UTxOS and specifically select the piece of bitcoin you want to send. It is also possible to select multiple UTXOs by holding the key Ctrl when clicking.

After selecting the UTXOs of your choice, click on the button Send Selected.

You will then be back in the tab Send, but with a piece specifically selected for the expense.

In this tab, you can enter the recipient address in the box Pay to.

The camera icon allows you to use your webcam to scan the QR code for the recipient's address. The button +Add allows you to add multiple recipients to the transaction.

In the box Label, you can add a tag to remember the purpose of this transaction.

In the box Amount, enter the amount you want to send to this address.

You then have the option to adjust transaction fees based on the current state of the market. To do this, you can either drag the cursor on the bar Range to change the charges in Sats/VB, or enter an absolute value for the fees in the field Fee.

Below, you can see a diagram representing your transaction. On the left, there are the UTXO consumed as input, and on the right, the UTXOs generated as outputs, in addition to the fees. In my example, there are two outputs: one for payment and the other representing the exchange (returned currency), which goes back to my own wallet.

If everything suits you, you can click on the button Create Transaction.

On this page, you can check your transaction again, including the recipient's receiving address and the fee amount. If it's ok for you, click on the button Finalize Transaction for Signing.

Connect your hardware wallet to your computer, unlock it, and if necessary, open the Bitcoin application. When you are ready, click on the button Sign to send the transaction to be signed to your hardware wallet.

Choose your device and click Sign.

On your hardware wallet, make sure that the recipient address and transaction fees are correct. If everything is correct, confirm and sign the transaction on your device.

Once signed, the transaction will be sent back to Sparrow. At this point, although the transaction is signed by your hardware wallet, it has not yet been transmitted to the Bitcoin network. Take a moment to check all the transaction details one last time. When you are ready, click on the button Broadcast Transaction to broadcast the transaction to the node network.

By going back to the tab Transactions, you can now see your bitcoin shipment.

By clicking on the magnifying glass, you can see the details of your transaction, including its identifier (TXID).

➤ Learn more about managing UTXos in a wallet.

Conclusion

Congratulations! You now have all the knowledge you need to effectively manage your Bitcoin wallet with Sparrow Wallet. In my opinion, this tool is one of the best solutions available for managing Bitcoin wallets. It combines ease of use with a clean graphical interface, ideal for beginners, while offering a full range of features for more experienced users. It is a software that will follow you throughout your progress on Bitcoin.

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