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
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