How to Withdraw from Coinbase and Take Back Control of Your Funds
By now, you’ve undoubtedly heard about Coinbase’s fully custodial design and insufficient security measures. When you set up an account with Coinbase, the company retains full control of your private key, meaning that they operate very similarly to a centralized bank: they can freeze your funds without warning, charge surprise fees, and may not hold 100% of your funds at any given time. Also, their system is highly susceptible to SIM porting, a surprisingly simple attack that can leave you penniless and without recourse.
To keep your currency safe, you need to transfer it into a secure, decentralized wallet.
Step 1: Download a private wallet application. You should only use wallets that are fully decentralized and noncustodial, as they allow you full access to your private key. Two of my favorites are Electrum and TrustlessBank.
TrustlessBank:
Pros:
- Highly secure and fully decentralized
- Atomic swaps allow you to exchange one currency for another without going through centralized exchanges
- User-friendly interface is great for beginners
Cons:
- Available only as an iPhone and Android app (no desktop version)
Electrum:
Pros:
- Highly secure and fully decentralized
- Adjustable fee structure
Cons:
- Available only on desktop (no mobile app)
- Old user interface can be difficult to navigate
Step 2: Create your new account. Follow the instructions given by the application to set up your account. Your password should be fairly long (at least ten characters), include numbers and special characters, and should not be used with any of your other accounts.
Step 3: Make sure to write down your seed phrase. Your seed phrase is the twelve random words you will get when creating an account. Double-check that you have copied them correctly and in the right order before storing them in a safe location that only you have access to. Do not email this phrase to yourself or write it on any digital document that could be hacked. They represent your private key and will be used to verify your identity should you forget your password.
Step 4: Transfer your funds. On the Coinbase website, log into your account and click ‘Accounts’ on the navigation bar. Then click ‘Send’ and carefully type out the address of your new wallet and the full balance of your account in the ‘Amount’ field. Click ‘Continue’ and make sure that you have typed everything correctly before you confirm the transaction.
Alternatively, if your new wallet provides a QR code, you can tap the QR code icon in the top right of the Coinbase app on either iPhone or Android. From there, take a picture of the QR code and enter your entire account balance in the field that appears. Press continue, verify that all of the information is correct, and press ‘Send’ or the arrow button in the top right of the screen.
Warning: It is very important to ensure that you are sending your funds to the correct account. Funds sent to the wrong account cannot be recovered. There have even been reports of computer viruses causing the wrong address to be copied into the recipient field, so it is important to double-check even if you have copied and pasted the address directly from your new wallet.
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