Transferring Out of the Exchange
There are all together too many horror stories of exchanges being victim of high-profile hacking attacks, DDoS and DNS Phishing attacks where the website’s name server is compromised and a malicious site is displayed in place of the legitimate one. Obviously if you send funds to one of these, they are lost to the Ether…
Mt-Gox being the largest theft of Bitcoins to date at 850,000 coins, who -after a lengthy trial- the owners ended up in Jail for Embezzlement of users’ funds. Also, Bitfinex had $86million dollars stolen from their coffers; rather than declare bankruptcy and close, they distributed the loss to all of their users equally, even those users not affected by the attack directly.
Long story short, it’s always going to be better for you to have complete control over your own funds. This means that you own the Private Key for the account that you’re using. Leaving your funds in the exchange is leaving you exposed; unless of course, you need your funds in the exchange for trading or converting back to traditional currency. This short period of time is acceptable.
In essence, the private key can be considered to be your debit card and PIN number in one – if you allow someone to have or control it, you are giving them unrestricted access over every public key (wallet address) associated with it; meaning that they can transfer your funds out to another address…
There are many digital currency wallets out there to choose from. Some more secure than others. I’ll go into this in more detail on the next page.
I’d recommend that you buy yourself a good hardware wallet (also known as a cold wallet). This way, the private key is never stored on a system has access to the internet and that can be compromised. Instead you use a website to generate a signing request which is then sent to the device to be signed by the private key. Think of it as someone writing all the details on to a cheque for you, then passing it to you to sign… while you’re in space, totally isolated from everything.
The two most popular are Trezor Hardware Wallets and the Ledger Nano S. I’ve provided links to the manufacturer’s websites, but you should check twice for yourself that you are on the correct website. I would not recommend buying them from anywhere else other than the manufacturer. You want to be sure that no-one else has tampered with it before arriving with you. I believe that the Nano S uses a firmware validation script before you can use it to prove it is as the manufacturer intended, but I cannot validate this as I do not own it. I use a Trezor.
So How Do You Transfer?
I’ll be using Coinbase again for this example, but the instructions will be roughly similar for any exchange that you use.
Start by going to “accounts” in the top menu bar, locating your wallet that coin-tains (ha) the crypto that you want to move, in my case ETH and clicking send. I’ll be transferring the 0.13ETH I bought on the previous page to my cold wallet.
Next you’ll enter your wallet address in the “recipient” field.
Coinbase uses a nice feature of a “Send Max” button which will calculate the maximum that you can send while still leaving enough over for the transaction fee which are displayed at the bottom of the window.
Take exquisite care here, particularly when transferring a “forked” currency, that is either Bitcoin or Bitcoin Cash and Ethereum or Ethereum Classic. At the programming level they are roughly identical and in some cases it can be possible to send Bitcoin and even Litecoin to a Bitcoin Cash address.
This, for the network is very much a square peg in a round hole and the chance of you loosing your funds permanently is high. Some exchanges may quickly point out that the address format is not the expected type, where some may not.
I’d advise against testing this. Just check the address more than once.
This is you last chance to confirm the amounts and the intended send-to address. Click confirm to… confirm.
You’ll note that I haven’t obscured my address in the “to” field, this is because that address is my public address. Sharing this address with someone enables them to send you funds and is totally secure to do so. This address is also at the bottom of this page in the footer if you’d like to drop me a tip as your second ever transaction. 😉
Well Done! “View Details” to go to etherscan.io and watch the transaction happen in real time.