Self-custody Bitcoin, EthereumIt is very popular to buy cryptocurrencies and other assets. More attention Ever since Sam Bankman Fried’s FTX stock exchange unexpectedly The building collapsed A few weeks back, in a whirlwind drama.
Users of the third-largest former exchange don’t know when they will get their money back. This is why many people are leaving centralized exchanges like FTX Oder Coinbase With their funds.
Nick Neuman, Casa CEO and cofounder of self-custody platform Casa said that leaving your funds on exchanges can expose you to hacks, frozen withdrawals dues to business failure and insider fraud. DecryptFTX was cited as an “exemplary” of this.
Self-custody allows users to move their funds on their own. Wallets Only they can.
“There are commonalities between Private keys Your car keys. You can give someone else the key and they will be able to access your car. Pascal Gauthier CEO at Ledger said, “If you keep the key, you’re free to do what you want.”
If you are interested in having complete control over your crypto, you can follow these steps to transfer your funds from an Exchange to a wallet you own.
You can create a wallet via a self custody platform
We must warn that, although self-custody is a way to protect yourself from being robbed by third parties, it does not replace personal responsibility.
All users must note down the details. Seed phraseThis is roughly equivalent to a password and can be used for backup of all addresses associated with the wallet. If you have the following: Seed phrase is lost, Bitcoin It is also lost forever if crypto is tied to it.
There are many wallets that you can use to store your money if you’re ready to accept this responsibility.
We’ll take a look at the popular desktop wallet called Electrum.
Once you have downloaded the Electrum wallet softwareAfter some initial setup, you’ll be prompted for a new “Seed phrase.” This is the key “password” you mentioned. Note the 12 words. This is the most important thing because if you lose them, there’s no place to go to get your money. This is why it’s so important to keep your words safe. Offline. In other words, do not save these words in a file on your phone or on your computer.
There are many other wallets that you can choose from. However, the process for downloading the wallet (on mobile or desktop) is similar. Once downloaded, take a note of the key words and do not share them. Important: Do Share this seed phrase and the recipient of it will have complete access to the wallet contents.
You will need a different wallet for other cryptocurrencies. MetaMaskFor self-custody, a popular browser and mobile money is called. Ethereum Other compatible tokens. The most popular wallet is Phantom Solana Solana-based assets. There are many other examples.
A second option is to use a Hardware walletColdCard or Ledger, which store the keys in an offline environment to protect it against potential hacks.
Transfer funds off the exchange
Once you have chosen your wallet provider, it is time to transfer your funds from the exchange into your new wallet.—You control your wallet.
To send Bitcoin or other crypto, you will first need to create an address in your wallet. To generate a Bitcoin address, click on the “receive” button in Electrum. This is a string of letters and numbers that looks a lot like an email address. MetaMask, Phantom and similar browser-based wallets have already created the address. You’ll need click on “Account”, “Deposit”, or another button similar to copy that address onto your computer’s clipboard.
For each asset, you will see a “Withdraw” button at your chosen exchange like Coinbase. You will need to click the button “Withdraw” for the assets you wish to transfer to your wallet.
You’ll often be asked by the exchange to verify that you are copying the correct wallet address or confirm that you want to withdraw funds. The mechanics of each exchange will vary.
Self-custody rabbit hole
You’ve now sent your crypto from an exchange to your own self-custody wallet—so what’s next? The motto of the Bitcoin sphere is “Do your own research” (DYOR). There are many resources to help you become as knowledgeable about cryptocurrency as possible. Self-custody can be considered its own. rabbit hole worth exploring.
You have more options than what we have described for self-custody.
Multisig wallet options like Casa offer greater flexibility. The wallet is not protected by one private key. It can be secured by several at once. The wallet is protected by several keys at once so that even if one key is lost or stolen, all funds are safe. (Though it’s possible for two keys to be lost.
Some users carve their artwork. Seed Enter the phrase Metal plates For additional security, If they are not able to find them, Seed For example, phrase is stored fires down Seed The phrase should be legible.
Neuman also points out that self-custody’s user experience is improving. Casa’s user experience doesn’t require you to write down or remember the details. Seed phrase. It is possible for anyone to do it. Neuman expressed confidence that it could be improved so that anyone can have their keys in safety.
Disclaimer
The views and opinions of the author should be considered informational only. They do not constitute investment or financial advice.