On an exchange or in your own wallet

When you buy bitcoin on an exchange or app, the company usually keeps it for you and holds the keys. That is convenient, and it means the bitcoin is only as reachable as the company. Keeping it in a wallet of your own means nobody can freeze it, and nobody can help if you lose the keys.

The trade-off

	On an exchange	In your own wallet
Who holds the keys	The exchange	You
Forgot your password	Reset with the company	Your backup words are the only way back
Can it be frozen	Yes, by the exchange, or by a court through it	No
If the company fails	Your coins can be stuck for years	Not affected
If you are careless	The company may help	Nobody can

The saying "not your keys, not your coins" sums up the left column. Many people keep a small amount on an app for buying and selling and the rest in a wallet whose keys they hold.

When exchanges failed

• Mt. Gox, 2014. Once the biggest bitcoin exchange, it stopped withdrawals and said about 850,000 bitcoin were missing. Customers began receiving partial repayments about ten years later.
• QuadrigaCX, 2019. A Canadian exchange collapsed after its founder died. Investigators found customers' money had been misused, and about C$169 million was owed.
• FTX, 2022. One of the largest exchanges froze withdrawals and went bankrupt within days. Customers were later repaid in dollars, at about what their coins were worth when it collapsed plus interest, so they missed any rise since.

Moving bitcoin to your own wallet

1. In your wallet, choose Receive and copy the address it shows.
2. On the exchange, choose to withdraw or send bitcoin, and paste the address. If it asks for a network, choose Bitcoin.
3. Compare the whole address with the one your wallet shows, not just the first and last few characters, and look at the withdrawal fee.
4. For a large amount, send a small test first and wait for it to arrive.
5. Wait for confirmations. See did my payment arrive.

Frozen, stuck or on hold

Exchanges can hold your account for several reasons: an identity check that isn't finished, a security review after unusual activity, a waiting period before newly bought coins can be withdrawn, a legal requirement, or a court order. Some hold-ups are routine and pass in days. What helps:

• Contact support only through the exchange's own website or app, and read the reason it gives.
• If an ID check fails, the usual causes are a blurry photo, an expired document, or a name or address that doesn't match the account. Many exchanges list which documents they accept.
• Keep records of what you sent and when, and ask for a written reason if the hold continues.
• If an exchange stops responding, the financial regulator where it is licensed usually takes complaints.

People offering to unlock your account through social media or messages are scammers; real support never contacts you first.

Proof of reserves

Some exchanges publish the addresses that hold their customers' coins, so anyone can check the balances on the chain. The largest single bitcoin address belongs to one such list; see it in keys, addresses and wallets. A list like that shows coins at one moment. It doesn't show how much the exchange owes, so it is a piece of evidence, not a guarantee.