How to Safely and Securely Transfer Cryptocurrency

In today’s fourth article in this five-article series, I’d like to introduce you to the often-confusing universe of cryptocurrency addresses.

In the first article, I showed you how to get started investing in cryptocurrencies by opening and funding a Coinbase account (Getting Started with Cryptocurrencies).

In the second article, I described the steps to buy, sell, and convert your Bitcoin (Buying and Selling on Coinbase). In the third, I discussed why you might want to move from Coinbase to Coinbase Pro (When to Move to Coinbase Pro), to get access to more advanced order types.

But before I get to more advanced orders (article 5 in this series), it’s important for you to understand how to use crypto addresses when you want to move your crypto to another exchange, or pay someone with crypto, or receive crypto from someone else.

Understanding how to use crypto addresses has been challenging. The process is getting easier as exchanges improve their customer interfaces but if you don’t do it right, your crypto may end up in the unrecoverable ether. So, when transferring cryptocurrencies to a different exchange or another person, it’s very important to get the crypto addresses correct.

There are two types of addresses — private and public. A private key identifies your crypto; never share that with anyone. This article focuses only on the public key that’s used for sharing with others. (This key can be found on your crypto exchange.)  

When you want to buy a cryptocurrency with BTC (essentially exchanging one for the other), a crypto exchange, such as Coinbase, will take care of addresses for you. But if you want to transfer your BTC from one exchange to another, you will need to use the public crypto address.

Step by step

For example, let’s say you want to withdraw BTC from the Kraken exchange and transfer it to your Coinbase account. Kraken will ask for the Coinbase BTC address. It’s very important to get the address correct.

A BTC address will look something like: 1qxy2kgdygjrsqtzq2n0yrf2493p83kkfjhx0wlh (it might have “bc” at the beginning).

You can understand how difficult it would be to manually duplicate that into the Kraken withdrawal window. You’ll be safer copying and pasting the address. Most exchanges show a copy icon to the right of the address.

On the exchange that will be receiving your crypto, click on that copy icon and then paste that address into the withdrawal window of the exchange from which you’re withdrawing the cryptocurrency. If you use ctrl-c to copy and ctrl-v to paste, however, you could make yourself vulnerable to hackers who might be tracking your keystrokes.

After pasting the address into the window of the withdrawal exchange, check to be sure it’s the same address that was on the receiving exchange. One quick way to be sure you are using the correct address is to check that the first letter/number is correct. Several crypto examples are shown in the table below:

After ensuring you have the start of the correct address, check the first five and last five letters or numbers to ensure they match. Then transfer only a small amount to ensure it was successful. If yes, repeat the procedure to transfer the balance.

It’s the same procedure when paying someone with crypto — you’re withdrawing from your crypto exchange so you’ll need the public address of the person to whom you’re transferring your crypto. If you and the other person are using mobile crypto exchange apps, it’s common to be able to read a QR code on the other person’s app and do an automatic copy of their address into your exchange app.

All of this will get easier as crypto exchanges evolve, especially once major stock exchanges begin trading cryptocurrencies. But for now, always double check those addresses before moving your crypto.

If you’d like to learn much more about cryptocurrencies, crypto exchanges, and the state of the crypto market, sign up for a free trial of my weekly Crypto Wealth Protocol newsletter.

Investing 101: Do Bonds Belong in Your Portfolio?

Portfolio diversification is a strategy that helps investors manage risk. Investors often choose to diversify among industries for stocks, for instance. But they also consider diversification within different assets types.

Should You Use Extra Cash to Invest or Pay Off Debt?

Deciding between repaying debt repaying versus investing may seem impossible. Everyone’s financial situation is different and only you know from an emotional standpoint what might work best. Start with your

6 Healthy Morning Rituals That Make the Most of Your Day

Whether you are a “morning person” or not, how much thought do you give to the start of your day? Do you realize that by adopting a few simple morning

How to Read and Understand an Options Quote

When you begin trading options you'll spend part of your research scanning for the right options to buy. When you find a list of options, then you'll need to learn

Test Your Financial Advisor’s Loyalty with These Simple Questions

You have a financial advisor in order to make certain you have budgeted your money correctly, have planned for future financial needs, and, in some cases, to turn some of

Sell Puts the Smart Way: Get Out Before Expiration Nears

Selling put options can be a great way to help increase the value of your portfolio without taking on too much risk. At its core, a put sale allows investors

refinancing

4 Pros and 1 Con of Refinancing Your Home

Two years ago the 30-year fixed mortgage rate was 4.6%. Today it is 2.9%. If your mortgage is in the high threes, you should consider refinancing. Refinancing would lower your

Easy Finance Tip: How to Calculate Your Net Worth

To calculate your net worth, just subtract your liabilities (what you owe) from your assets (what you own). While the equation is simple, it's important to get a snapshot of

Just a Few Bad Market Years Can Slam Your Retirement: How to Cut Your Risk

I believe one very underappreciated risk for investors preparing for retirement is the concept of “sequence of returns.” Sequence of return risk is the danger that the timing of withdrawals

Tai Chi Can Benefits for Those with Chronic Diseases

The Chinese martial art of tai chi can be beneficial to people suffering with chronic illnesses, according to research in the British Journal of Sports Medicine (2015), conducted by Dr.

Two Measures of Options Volatility That Matter

Most people often have a notion of what volatility means. They understand, at least conceptually, that it has to do with data of situations that vary over time. Weather is

3 Financial Habits to Adopt Before You Retire

Nobody wants to work until the day they die. We all want to get to a point where we can simply sit down, relax, and enjoy life.  Consider adopting these