How to get your bitcoin off exchanges
Are you ready to claim your bitcoin for real? Kudos to you.
Withdrawing bitcoin from exchanges is a major step in claiming your digital sovereignty. Whether you consider bitcoin just an investment or a powerful tool for personal freedom, having true possession of your bitcoin — starting with your private keys — is the best way to preserve your money for the future.
Although exchanges are a helpful place to buy and sell bitcoin, they’re not a good option for securing your bitcoin forever. Exchanges have lost a massive amount of bitcoin over the years from theft, mismanagement, and accidents.
At Casa, we’re always here to help you secure your bitcoin. In this quick overview, we’ll discuss how to withdraw bitcoin from an exchange.
How bitcoin withdrawals work
Withdrawing bitcoin is different from withdrawing cash. Bitcoin exists online on a blockchain, a public ledger maintained by a network of computers.
To withdraw your bitcoin, you’ll need your exchange to communicate with the network and send an on-chain transaction on your behalf. In this transaction, the exchange will use their private key to send your bitcoin to your address. Once that transaction is confirmed on the blockchain, the bitcoin is yours to spend.
Decide on a custody option
Before you can withdraw bitcoin, you first need to determine how you’re going to secure your funds. There are several ways to practice self-custody with varying levels of security.
A mobile phone wallet is a good option for getting started with holding your own private key if you’re only holding a small amount of bitcoin. Mobile wallets are convenient for spending bitcoin, but they are almost always connected to the internet and vulnerable to hacks.
If you have more bitcoin than you would feel comfortable carrying with you all the time like cash, it makes sense to start using some form of cold storage, where you secure your key offline, such as a hardware wallet. Proper cold storage is more effective for securing bitcoin than a mobile device alone. The guide below can help you weigh your options.
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Set up your own key
When you’ve chosen a custody method, it’s time to generate your very own private key.
Keys are a big deal — they provide the foundation of your bitcoin security. Bitcoin is built on layers of cryptography, and keys unlock your ability to spend funds.
There are a few methods for generating keys, ranging from simple to complex. Mobile apps and hardware wallets can walk you through creating your first key. Whatever custody method you choose, be sure to follow the device instructions closely and back up your seed phrase accordingly.
Want help managing keys?
Our Casa advisors take away all the guesswork of securing your bitcoin with flexible plans for every investor. Book a call to learn more here.
Upgrade when you’re ready
As your holdings increase, it is crucial that you take action to protect your bitcoin further, and the absolute best method for securing bitcoin is with multiple keys.
Imagine you had to authenticate with three keys to spend bitcoin. You could spread these keys across different devices, locations, and even individuals you trust, such as family members. By spreading out your security, you avoid exposing your bitcoin to a single point of attack.
At Casa, we practice this distributed security model known as multisig to balance airtight security with smooth recovery, so only you and those you trust have access to your bitcoin. This acts as an additional layer of security for when you have larger amounts of bitcoin.
Verify your receive address
Once you have created your own key, you can use it to generate a new address. On Casa App, this can be done by clicking “Receive.”
Log onto your exchange and find the instructions for withdrawing bitcoin. Each exchange is different, and we have support articles on how to withdraw bitcoin from Coinbase and Kraken.
If you recently purchased your bitcoin, there could be a waiting period of a few days before your bitcoin is available for withdrawal. If your bitcoin is available, you’ll want to enter your new receive address to process the withdrawal. Casa App makes it easy for you to receive bitcoin using your mobile device.
Always verify receive addresses before withdrawing bitcoin. There are no do-overs in bitcoin. Some investors like to triple-check addresses and even send test transactions with small amounts just to be safe. Be absolutely sure you’re using the correct address before sending funds.
When you approve the transaction on your exchange, it can take some time for the exchange to broadcast the transaction to the network, and it can also take several hours for the transaction to be confirmed on the blockchain. The network can only process a limited number of transactions in each block, so don’t fret if you don’t see your bitcoin in your wallet right away. This is normal for bitcoin transactions.
Don’t stop withdrawing
It’s easy to fall into the trap of leaving bitcoin on exchanges, especially if you make regular bitcoin purchases, and even seasoned bitcoiners can use a reminder from time to time. As you continue learning about bitcoin, make regular withdrawals a part of your overall strategy.
Bitcoin was designed to allow you to hold your money safely without relying on third-party custodians. By withdrawing bitcoin to a set of keys you control, you are living up to this promise. Welcome to digital sovereignty!
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Jameson Lopp