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Author Topic: Connecting a hardware wallet to an exchange & transacting  (Read 85 times)
genesis2020
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January 07, 2020, 08:18:54 AM
 #1

Now I've 'upgraded' from Coinbase to Coinbase Pro, I'm officially an expert trader ( Wink ). In all seriousness though, as I get more into Bitcoin I think I should buy a hardware wallet sooner rather than later rather than leave all my funds on the exchange. How though, in practical terms, does this work?
Do I purchase my HW Wallet which, I assume, will give me an address for that wallet. Do I then withdraw (send) all my funds from Coinbase Pro to this wallet address, incurring a transaction fee? Or is there some other way? How then, in future, do I purchase more? Do I repeat the pattern, buying through something like CBP and then sending them to my HW Wallet, or is there a better way?

Thanks in advance for all information
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NeuroticFish
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January 07, 2020, 08:28:27 AM
Merited by DdmrDdmr (1)
 #2

Coinbase / Coinbase Pro, like most exchanges, use custodian wallets for you. That means that you have an account and a deposit address in their system.

Hardware wallets usually initialize to a seed (which you should keep super safe!) and based on that seed will generate for you as many addressees you'll need.
Indeed, you'll use the hardware wallet with either their wallet (like Ledger Live), either with a wallet that supports hardware wallets (like Electrum).
The exchange doesn't care about your local hardware wallet. The deposit address they give you it's not yours, it's theirs.


So yes, you'll have to withdraw the funds from exchange to your wallet, paying their withdraw fees or transfer back to exchange, paying the tx fee.
Normally you should keep on the exchange only the money you trade. Of course, you'll have to think in advance and optimize so you don't pay unnecessary fees.
You will also see that in the days there are bigger price fluctuations the network tends to be busier and the tx fees may rise.

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January 07, 2020, 08:59:02 AM
 #3

You install the app for the cryptocurrency you want to use on your hardware wallet. You generate a new address and you withdraw your funds from the exchange to this newly generated address. Just make sure that if you generate a native segwit address (the ones starting with bc1) your exchange supports withdrawals to those types of addresses.

Be in control of your keys and assets and don't keep funds you intend to hodl on exchanges. 

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January 07, 2020, 09:01:54 AM
 #4

Aside from what @NeuroticFish said, there are 2 things you should note :
1. Coinbase is quite strict, so they might hold-off the withdraw and ask reason why you withdraw all your funds.
2. Unlike transferring/send Bitcoin to another Coinbase users (which is free on some cases AFAIK), transferring/send to another Bitcoin address costs some tx fee and you need to wait for confirmation.

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January 07, 2020, 09:09:57 AM
 #5

A hardware wallet has it's own desktop app, just like your typical software wallets. One of the main difference is that the keys aren't going to be stored on your computer, but on the hardware wallet device itself, hence making it more secure than your typical software wallet.

And yes, there will be transaction fees, as with any other typical on-chain bitcoin transaction.

Do I repeat the pattern, buying through something like CBP and then sending them to my HW Wallet, or is there a better way?
There is no better way. You're going to need to send the bitcoin manually from CBP to your HW wallet's address, and again, that includes fees. So to save a bit of money and if the CBP withdrawal fees are too much, probably wait til you have a good amount of bitcoin on your CBP account before withdrawing.

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January 07, 2020, 02:13:21 PM
 #6

genesis2020, good thinking, if you are seriously entering the world of cryptocurrency hardware wallet might be the best way (most practical) in terms of security right now. Although you should keep in mind that the hardware wallet is as secure as the owner is aware of all the risks that come with it. Never type your seed (24 words) on your PC, e-mail or even take a photo of them with your smartphone, keep that seed in safe place + check every transaction on your hardware wallet display before you click send button.

If you decide to buy a hardware wallet, I suggest you not experiment with some new and inexpensive products, but pay attention to those who already have a good reputation, Ledger and Trezor.

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January 07, 2020, 04:31:34 PM
Merited by mk4 (1)
 #7

You're going to need to send the bitcoin manually from CBP to your HW wallet's address, and again, that includes fees. So to save a bit of money and if the CBP withdrawal fees are too much, probably wait til you have a good amount of bitcoin on your CBP account before withdrawing.
Someone can correct me if I'm wrong here (because I have never used Coinbase myself), but I was under the impression that bitcoin withdrawals from Coinbase Pro (and maybe Coinbase?) were free. Certainly that seems to be the case according to their support pages here: https://support.pro.coinbase.com/customer/en/portal/articles/2945310-what-are-the-fees-on-coinbase-pro-

Having said that OP, you probably still want to follow mjglqw's advice on waiting until you have a reasonable amount of bitcoin on your account before withdrawing. Although you won't have to pay fees for each withdrawal (I don't think), each withdrawal to your hardware wallet creates a separate "pool" of bitcoin. When you then want to transfer your bitcoin onwards, be that back to Coinbase, to a friend, to a merchant, to another wallet, anywhere at all, you will pay a fee based on the number of separate "pools", and not on the total value of your bitcoin. If you make lots of small withdrawals, then you will pay larger fees down the line when you go to move these bitcoin somewhere else than if you had made one or two larger withdrawals, even if the total amount of bitcoin is the same.

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January 08, 2020, 05:20:12 AM
 #8

You're going to need to send the bitcoin manually from CBP to your HW wallet's address, and again, that includes fees. So to save a bit of money and if the CBP withdrawal fees are too much, probably wait til you have a good amount of bitcoin on your CBP account before withdrawing.
Someone can correct me if I'm wrong here (because I have never used Coinbase myself), but I was under the impression that bitcoin withdrawals from Coinbase Pro (and maybe Coinbase?) were free. Certainly that seems to be the case according to their support pages here: https://support.pro.coinbase.com/customer/en/portal/articles/2945310-what-are-the-fees-on-coinbase-pro-

Oh whoops. I'm most probably in the wrong here. I just completely assumed that every single exchange has a withdrawal fee(and that Coinbase doesn't support the country I'm currently in). If it's the case that Coinbase Pro really does have no withdrawal fee, then better! I'm going to make another assumption that there's most likely going to be a minimum withdrawal amount though.

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