Chapter · Master Coinbase
Not your keys, moving to self-custody
When coins sit on Coinbase, the exchange holds the private keys. You have an IOU, a promise that the balance is yours. Self-custody flips that: you move coins to a wallet whose keys only you hold, so no company can freeze, lose, or lend them. History is the reason this matters. Exchanges have collapsed before, Mt. Gox in 2014 and FTX in 2022 being the loudest, and users who left funds on them were left in line with creditors. Coinbase is far more solid, but the principle stands: an IOU is not the same as owning the asset.
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What you get asked
What does 'not your keys, not your coins' really mean?
Ownership on a blockchain is control of the private key. Leave the key with an exchange and your balance depends on that exchange staying solvent and honest. Self-custody removes that dependency.
Match custodial and self-custody to their real traits
Self-custody removes counterparty risk but hands you full responsibility. Lose your seed phrase and there is no support line to call. Both sides of that trade are real.
Exchange collapses like Mt. Gox and FTX show why large holdings belong in ___ rather than left on an exchange.
When an exchange fails, on-platform users become creditors and may wait years for pennies. Coins in your own wallet were never the exchange's to lose.
Order the steps to withdraw crypto to your own wallet safely
Crypto transfers are irreversible, so a test send is cheap insurance against a wrong address. Confirm small, then move the rest.
When is it reasonable to leave funds on Coinbase rather than self-custody?
An exchange is fine for small, active balances where convenience wins. For long-term or large holdings, self-custody removes a company from between you and your coins. Match the tool to the size. 🐜
The rest of this chapter
Buy your first crypto safely, understand fees, and know when to self-custody.