FAQs Frequently Asked Questions
Crypto Report
Cryptocurrency storage methods
"One should always keep their coins in their own wallet, guard their private keys, or better yet, keep them offline in cold storage..."
Question 1: If you have purchased Bitcoin through an exchange like Coinbase, are you saying that it is better/safer to remove it from there, and store it in your "own wallet"?
If you leave your coins on an exchange, that exchange could prevent customers from withdrawing their coins for whatever reason, the most likely being government order. Of course, the exchange could also get hacked though this has become less of an issue with the largest exchanges.
Question 2: If so, how would one go about doing that? Contact Coinbase and ask them to remove it from their cold storage and send it over to me? To where? But they already know MY private key. Info which is now stored somewhere on one of their servers for eternity... and can then be seized. Right?
You would create an online (google for various such as MEW, metamask, or trust wallet) or cold storage wallet (google for various such as trezor or ledger). You would then send the coins from each Coinbase wallet to your own wallet. Google for precise instructions on how to do this. For example, if you owned 3 different coins on coinbase, you would instruct coinbase to send each coin to your new wallet address. Each address is usually unique for each coin. In the case of an online or cold storage wallet, you typically send coins from exchanges such as Coinbase to a main address on your online or cold storage wallet.
Question 3: As an exchange, I assume Coinbase is subject to a gov't seizure/control at any time with all of their clients private keys!?
Correct.
Question 4: How does the "9 word seed phrase" work, and where can I learn more about this subject to make the best decision on where to safely store Bitcoin?
Google key phrases such as "where to best store bitcoin and alt coins and cryptocurrencies". Each wallet contains a 9 to 24 word seed phrase which is your backup phrase in the event you lose the hardware (your laptop, phone, etc) that contains the wallet.
Question 1: If you have purchased Bitcoin through an exchange like Coinbase, are you saying that it is better/safer to remove it from there, and store it in your "own wallet"?
If you leave your coins on an exchange, that exchange could prevent customers from withdrawing their coins for whatever reason, the most likely being government order. Of course, the exchange could also get hacked though this has become less of an issue with the largest exchanges.
Question 2: If so, how would one go about doing that? Contact Coinbase and ask them to remove it from their cold storage and send it over to me? To where? But they already know MY private key. Info which is now stored somewhere on one of their servers for eternity... and can then be seized. Right?
You would create an online (google for various such as MEW, metamask, or trust wallet) or cold storage wallet (google for various such as trezor or ledger). You would then send the coins from each Coinbase wallet to your own wallet. Google for precise instructions on how to do this. For example, if you owned 3 different coins on coinbase, you would instruct coinbase to send each coin to your new wallet address. Each address is usually unique for each coin. In the case of an online or cold storage wallet, you typically send coins from exchanges such as Coinbase to a main address on your online or cold storage wallet.
Question 3: As an exchange, I assume Coinbase is subject to a gov't seizure/control at any time with all of their clients private keys!?
Correct.
Question 4: How does the "9 word seed phrase" work, and where can I learn more about this subject to make the best decision on where to safely store Bitcoin?
Google key phrases such as "where to best store bitcoin and alt coins and cryptocurrencies". Each wallet contains a 9 to 24 word seed phrase which is your backup phrase in the event you lose the hardware (your laptop, phone, etc) that contains the wallet.
| First published: | 19 Oct 2020 |
| Last updated: | 19 Oct 2020 |