Friday 14th February 2025

Confused trying to move your crypto from a centralized exchange to your own hardware wallet?

Don’t worry, I was too. But now that I’ve done it I’m here to help.

I first got into crypto in late 2021, and while I had a fair amount invested on both Binance (I am using Binance.US) and Coinbase, it wasn’t enough to have me concerned leaving it on an exchange… That is, until the FTX debacle. That was the final straw that made me decide it was time to “own my keys, own my crypto.”

Before starting I read articles and watched videos and it all sounded straight forward. Feeling confident, I bought my Ledger Nano S Plus, but when it arrived and I plugged it in I realized there were a few things that hadn’t been made entirely clear.

First off, I wanted to make sure I knew how to use my cold storage device correctly from a functional standpoint, and there was nothing I could find to answer my question “How do I safely eject and disconnect my Ledger?” Strangely I could find nothing definitive, but the consensus on Reddit seemed to be just wait for any syncing to complete and unplug. And so far that’s what I’ve done without issue.

Now that I knew I wouldn’t accidentally yank the cable and lose everything, it was time to test some transfers. There are plenty of great articles out there that step you through the process so I won’t do the same here. But the issue for me is that most tutorials go straight into a functional step by step without explaining basics that might be missed if you’re a beginner. So here’s the next important thing you need to understand:

Each crypto asset that you want on your Ledger needs to be held in a different account in Ledger Live and needs to have the appropriate app for that asset installed on your Ledger dvice. Kind of confusing, but if you understand that each crypto is different project, the same goes for storing the keys on your Ledger, it needs the app that understands that asset. And likewise on Ledger Live (the app on your computer that lets you access your Ledger hardware) it needs to have a different account for each asset as well. If you’re confused just try it out and you’ll find that the Ledger Live app guides you through what you need to do. Except for Bitcoin… As I will explain.

For most cryptos you select the one you want and Ledger Live handles it, but Bitcoin is a bit trickier. When you create the account on your Ledger it asks you a question that is going to confuse all but the experts: What address type do you want to set up? Native Segwit, Segwit, Taproot, Legacy. I had no idea, so off to Google where I found horror stories of people sending their crypto to incompatible address types, and I was rightly concerned about making the right selection. So down the rabbit hole reading about the different address types, and specifically my concern was whether they were supported by Binance and Coinbase. (Each exchange will use a specific address type, and not always the same as another exchange.) Also since I had BTC on both Coinbase and Binance, I wanted an address that both exchanges could send to and receive back from. I couldn’t find anywhere on either Coinbase or Binance help where this was explained, but I was able to look in my wallet on each respective exchange and see what the address was, but nothing about compatible addresses to send to.

For me this is what I consider one of the most shocking and frustrating oversights in the world of crypto, and what probably keeps people from getting involved. Exchanges make it easier to buy crypto without technical knowledge, but as we’ve seen with FTX, 3AC, Terra, BlockFi, on and on, staying on an exchange leaves the average user at the mercy of these companies. And these technical details are beyond what most average people will understand, and rightly so, and without any guidance it’s easy to understand why people make mistakes.

But back to the address type for your Bitcoin account on Ledger. I found that in Coinbase my BTC address starts with “3” which means it’s Segwit and my Binance BTC address starts with “x1” which means it’s legacy. So in theory you could create a compatible account for each exchange and transfer your coins, but both those types are also older and the fees would be higher if not set by the exchange. Again thanks to Reddit I found that both Coinbase and Binance can send to Native Segwit addresses, which is the newest type, and also means fasters transactions with lower fees.

So on your Ledger if you set up a Bitcoin account with address type Native Segwit you will be able to transfer coins from both Binance and Coinbase in the same Ledger account.

The last interesting thing I learned is about fees. Binance publishes a fee schedule which assesses a flat fee per withdrawals (ie send to Ledger). But on Coinbase I found the actual fees to be much less than they list. They’ll say it’s 1% or something like that, but in reality it ends up much less. The best explanation I could find is that because they bundle multiple users’ transactions, the fee is actual set for the entire transaction and you just pay for your portion of it.

Good luck on your crypto journey! Let me know what questions you have below in the comments.

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