How to Move Bitcoin, Ethereum, and Other Cryptos to Self-Custody – Decrypt
The self-care of Bitcoin, Ethereumand other cryptocurrency assets are attracting a lot More attention from Sam Bankman FriedFTX exchange unexpectedly exploded a few weeks ago in a whirlwind of drama.
Users of the former third largest exchange have no idea if they will ever get their money back. With this in mind, many users decide to no longer trust centralized exchanges like FTX Where Coinbase with their funds.
“If you leave your funds on an exchange, you put yourself at risk of hacks, frozen withdrawals due to corporate bankruptcy, and insider fraud,” said the platform’s CEO and co-founder. self-preservation Casa, Nick Neuman. Decryptciting FTX as a “striking example” of this.
With self-custody, users move their funds into their own wallets that they alone control.
“There are similarities between private keys and car keys. When you give the only key to someone else, they can get into your car and drive away. If you keep your key, you are free to do whatever you want,” said Pascal Gauthier, CEO of Ledger.
If having full control of your crypto sounds appealing to you, follow these steps to transfer your funds from an exchange to a wallet you own.
Create a wallet on a self-custody platform
A necessary caveat before we begin is that while self-custody helps protect users against third-party theft of their money, it requires much stricter personal liability.
Users must write a seed sentence, roughly equivalent to a password that can be used to save all addresses linked to the wallet. If the plant sentence is lost, the Bitcoin or the crypto linked to it is lost forever.
If you’re ready to take on this responsibility, there are tons of wallet options to use to store your funds.
We will be reviewing the popular Electrum desktop wallet.
Once you have downloaded the Electrum wallet softwareafter an initial setup, you will be prompted to create a new “plant This is the important “password” we mentioned. Write down the 12 words. This is the most important step because if you lose those words, there is no support service to turn to for your money back. It is important to keep these words safe and offline. (In other words, don’t store these words in a file on your computer or phone.)
There are many other wallets to choose from, but the flow for the wallet you choose is pretty much the same: download the wallet (desktop or mobile), then write down important words that should never be lost or shared. (Important: if you do ever share this seed phrase, the recipient of the phrase will have full access to the contents of the associated wallet.)
Other cryptocurrencies require different wallets. Metamaskfor example, is a popular browser and mobile wallet used for self-custody of Ethereum and other compatible tokens. Phantom is the most used wallet for Solana and assets based in Solana. And there are many other examples.
Another option with more security is to use a hardware walletlike Ledger or ColdCard, which stores keys in an offline environment, protecting it from potential hackers.
Withdraw funds from the exchange
After choosing your wallet provider, now is the time to transfer your funds from the exchange to your new wallet.—a wallet that you (and only you) control.
You will first need to create a new address in your wallet to send your Bitcoin (or other crypto) to. In Electrum, you click the “receive” button to generate a Bitcoin “address”, a chaotic string of numbers and letters, much like an email address. In MetaMask, Phantom and other similar browser-based wallets, the address has already been created and you will need to click “Account” or “Deposit” or a similar button to copy this address to your clipboard. computer.
On your chosen exchange, let’s say Coinbase for example, there will be some sort of “Withdraw” button on your account page for each of your assets. In order to send the funds to your wallet, you will need to click on the “Withdraw” button for the corresponding assets (“Bitcoin” for a Bitcoin wallet, “Ethereum” for an Ethereum wallet, etc.), paste the wallet address in self-service that you created, then click “Send”.
Often the exchange will ask you to make sure you are copying the correct wallet address or to confirm that you really want to withdraw your funds, but the the mechanics will be slightly different depending on the exchange you are using.
Self guard rabbit hole
You have now sent your crypto from an exchange to your own self-custody wallet, so what’s next? “Do your own research” (DYOR) is a motto in the Bitcoin sphere because there is a lot of information to sift through to be as knowledgeable about cryptocurrency as possible. Self-guard could be considered his own rabbit hole worth exploring.
There are more complex options for self-guarding beyond what we’ve covered above.
For example, “multi-sig” wallet options, such as Casa, offer more flexibility. Instead of a single private key, the wallet is secured by a few at a time. This way, if the user loses a key, their funds are still safe. (Although if two keys are missing, bad luck.)
Some users prune their plant sentence in metal plates for more peace of mind. If the place where their plant the sentence is stored burns, for example, the plant the sentence must always be readable.
And as Neuman points out, the self-guard user experience is improving all the time. Casa’s user experience, for example, does not require writing or memorizing the plant phrasing. “Anyone can do it. We believe we can continue to improve it in a way that allows anyone in the world to securely hold their own keys,” Neuman said.
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment or other advice.
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