In this Electrum watch only wallet tutorial, we walk through how to create a Bitcoin wallet that does have private keys on the computer.
We will use the Master Public Key from our standard wallet to create our watch only wallet. This wallet does not hold any private keys and can not sign transactions.
Electrum watch only wallets are useful to receive and monitor your Bitcoin wallet without exposing the private keys to an internet connected computer. Private keys on an internet connected device is referred to as a “hot wallet”. A better alternative to using hot wallets is to purchase a secure hardware wallet and use that to generate your seed words and use that device with software like Electrum.
Keep in mind that watch only wallets on any software can be a privacy concern if your XPUBS are being disclosed to a 3rd party. When using Electrum you want to make sure your connected to your own Bitcoin Full Node.
To Learn more about public keys and HD Wallets
More about private keys
For more general information on Electrum and Bitcoin