Why move your Bitcoin off an exchange

Exchanges make it easy to buy your first satoshis, but convenience comes at a cost. Custodial platforms aggregate funds, attract attackers, and can halt withdrawals during stress. In Canada, registered platforms must follow compliance rules and security controls, yet no platform can remove all risk. Self‑custody means you hold the private keys, not an email and password that can be reset. When you control keys, you control settlement, timing, and access. You also gain portability for travel and resilience during service outages or policy changes.

• Eliminate single‑point exchange risk while keeping buying optionality.
• Improve privacy by moving away from a centralized ledger of your activity.
• Enable flexible spending, Lightning usage, and advanced features like multisig and passphrases.

Pre‑flight checklist

Treat the migration like a financial operation. Preparation reduces mistakes and stress.

• Time window: schedule 60 to 90 minutes of uninterrupted time for setup and your first test send.
• Environment: choose a quiet, private room without cameras or smart assistants.
• Paper and pen: for recording a 12 or 24‑word seed phrase, plus any optional passphrase.
• Backup medium: consider a metal seed backup for fire and water resistance common to Canadian homes.
• Hardware wallet or secure mobile device: update firmware or app in advance.
• Exchange security: enable hardware‑based two‑factor authentication, set withdrawal whitelists, and verify your identity documents are current in case support is needed.

Security mindset: move slowly, verify every step, and prefer a smaller test transaction before moving your full balance.

Choose your custody approach

There is no one perfect wallet for every Canadian. Choose based on your holdings, technical comfort, and whether multiple family members need access.

Single‑signature hardware wallet

Best for most individuals. A dedicated device stores keys offline and signs transactions when connected or via QR. Combine with a metal backup and a clear recovery plan. Expect a one‑time cost for the device.

Mobile software wallet with strong backups

Good for small to moderate amounts and everyday spending. Use biometric unlock plus a secure device passcode. Turn on cloud backups only if you understand the encryption model, or prefer manual seed backups to remain fully self‑reliant.

Multisig for higher balances

A 2‑of‑3 or 3‑of‑5 setup spreads risk across devices and locations. This adds complexity but reduces the chance that one failure leads to loss. For many Canadians, a single‑signature hardware wallet is the right first step, and multisig can be added later once habits are formed.

Prepare your wallet the right way

Generate and verify your seed phrase

• Initialize the wallet offline and let it generate the seed phrase.
• Write down the words clearly in order. Do not photograph or store them digitally.
• If offered a 24‑word option, choose it for slightly higher brute‑force resistance, then store it well.
• Optional BIP39 passphrase: add a secret phrase that functions as a 25th word. Only use this if you can remember or securely back it up. Lose it and you lose access.

Pick the modern address format

• Native SegWit addresses start with bc1q and are widely supported. They offer lower fees and strong compatibility.
• Taproot addresses start with bc1p and can be efficient for advanced transactions and certain future features. Some services still limit Taproot withdrawals or deposits. If unsure, use bc1q.
• Legacy addresses that start with 1 and nested SegWit that start with 3 still work but often cost more in fees.

Create a test receive address

Open your wallet and generate a fresh receive address. If using a hardware wallet, confirm the address on the device screen. This device verification is your defense against malware altering on‑screen addresses.

Prepare your backup locations

• Primary: store the seed phrase in a secure home location with protection from moisture and fire.
• Secondary: place a duplicate or a metal backup in a separate location, like a safe deposit box. Avoid storing both copies in the same building.
• Disaster plan: write instructions that a trusted family member can follow if you are unavailable, without revealing the seed in plain text.

Secure your exchange account before withdrawing

• Enable hardware security key or time‑based one‑time password for logins and withdrawals.
• Set a withdrawal whitelist so new addresses require a waiting period.
• Record the withdrawal fee policy and any network limits. Many Canadian platforms charge a fixed fee per withdrawal, so batching your final move can save money.
• Beware of social engineering. Support staff will never ask for your seed phrase or your one‑time codes.

If your exchange offers address labeling, name your self‑custody address something clear like Home Wallet SegWit. Good labels prevent accidental sends to the wrong destination later.

Run a small test send

A test transaction reduces risk and builds confidence.

• Send a small amount, for example the equivalent of 50 to 200 CAD worth of Bitcoin.
• Double‑check the destination address on your hardware device screen or within your wallet app.
• Choose a reasonable network fee. Bitcoin blocks arrive on average every 10 minutes. A medium fee often confirms within a few blocks depending on network congestion.
• Wait for at least one confirmation before proceeding. For high assurance, wait for three confirmations.

Once your wallet displays the confirmed test deposit, you know the address format and path are correct. Archive or rotate to a new receiving address so you avoid address reuse, which improves on‑chain privacy.

Migrate the full balance safely

Batching and fees

If your exchange charges a fixed withdrawal fee, send your full amount in one go. If it charges a percentage, two or more transactions may be equivalent in cost but increase complexity. Plan for network fees within your wallet as well when you eventually spend or consolidate UTXOs later.

Final checks before clicking withdraw

• Verify destination address on device screen again.
• Confirm you have the seed phrase and optional passphrase written down, legible, and stored.
• Confirm you can unlock your wallet app or hardware device PIN.
• Confirm physical security of your backup locations.

After the withdrawal

• Monitor for the incoming transaction and wait for at least three confirmations.
• Record the transaction ID and date in your personal log. This helps with bookkeeping and tax records.
• Rotate to a new receiving address for future deposits.

Document your setup like a pro

Good documentation turns a secure setup into a durable one that survives time, travel, and memory lapses.

• Create a short paper describing the wallet model, PIN hint that only you understand, whether a BIP39 passphrase is used, and where backups are stored. Do not write the actual PIN or the passphrase on this sheet.
• Note your address format, for example native SegWit bc1q, so future transactions use the same standard for compatibility.
• Describe a recovery scenario. For example, if the device fails, retrieve seed from safe deposit box, buy a replacement wallet, and restore using seed words and passphrase.

Ongoing maintenance for Canadian conditions

Quarterly 3‑minute check

• Power on your wallet, verify it unlocks, and view receive addresses.
• Confirm your backups are still in place and readable. Consider reading a random portion of the seed to check legibility without exposing the whole phrase.
• Update firmware or app only from official sources and verify checksums if your device supports it.

Weather‑proofing backups

Canadian homes face humidity, temperature swings, and potential winter bursts. Pencil on archival paper inside a sealed bag is better than pen that can smear. For long‑term protection, use a stainless‑steel or titanium seed plate that can withstand fire and flood. If using multiple backups, keep them in different postal codes to reduce correlated risk.

Privacy hygiene

• Avoid address reuse. Generate a new receiving address each time.
• Keep exchange withdrawal addresses separate from day‑to‑day spending accounts.
• When consolidating small UTXOs, do it during low‑fee periods to reduce cost and improve privacy.

Troubleshooting common issues

The transaction is pending for hours

Network congestion can delay confirmations. If you used a low fee and your wallet supports Replace‑by‑Fee, you can increase the fee to speed up confirmation. Otherwise, some wallets let you use Child‑Pays‑for‑Parent by spending the unconfirmed output with a higher fee. If you are not comfortable with fee bumping, wait for the mempool to clear. Patience is often enough.

I sent to the wrong address type

Bitcoin addresses are not reversible. If funds went to your own wallet but to a different account path, restore the wallet using the same seed and correct derivation path to view the coins. If you sent to someone else by mistake, contact them immediately. Otherwise the transaction is final once confirmed.

My hardware wallet asks for a passphrase I forgot

A BIP39 passphrase creates a separate hidden wallet. Without the exact passphrase, the seed alone cannot restore those funds. Check any secure notes or memory aids you prepared. This is why you should only enable a passphrase if you can store it safely.

Seed phrase verification failed

If your device does not accept the words, confirm spelling and order. English word lists use a specific set of 2048 words. Do not panic. As long as your coins are still on the exchange during setup, you can reinitialize and generate a new seed before withdrawing.

Canadian‑specific considerations

Regulatory context

Exchanges that serve Canadians operate as money services businesses and follow Canadian compliance requirements, including reporting thresholds and suspicious transaction monitoring. Self‑custody for personal use is legal in Canada. Maintain your own records of acquisitions, transfers, and dispositions for tax reporting, since cost basis and proceeds are your responsibility.

Banking and withdrawals

Canadian platforms commonly support Interac e‑Transfer for fiat deposits and withdrawals, and wire transfers for larger amounts. When moving Bitcoin off exchange, none of that affects the on‑chain network, but it does affect your timing. Complete any pending identity checks and enable withdrawal whitelists before a weekend so you are not waiting for support during off hours.

Avoiding local scams

• Never meet strangers in person to swap for cash. Use reputable platforms and on‑chain transfers to wallets you control.
• Be careful with Interac e‑Transfer narratives. Fraudsters may pose as support and request you send a small payment to unlock features. Legitimate teams will not ask for that.
• Protect your address and transaction history when posting online. Screenshots can reveal balances and addresses that reduce your privacy and safety.

Advanced options once you are comfortable

Air‑gapped signing with PSBTs

Partially Signed Bitcoin Transactions let you keep the signing device offline and pass data by QR or memory card. This reduces exposure to malware on a computer. It adds steps but provides strong isolation for larger holdings.

Multisig with geographically separated keys

A 2‑of‑3 setup with different vendors and different storage locations mitigates single device failure and supply‑chain attacks. Practice recovery by restoring on any two devices before moving significant funds.

Decoy and passphrase strategies

Some Canadians choose a decoy wallet with a small balance without a passphrase and a main wallet protected by a passphrase. Use such strategies only if you fully understand the risks and can keep documentation clear for trusted family members.

Security pitfalls to avoid

• Photographing your seed phrase. Images sync to cloud services and can be compromised.
• Typing seed words into a computer that is online. Only enter seed words on a trusted hardware device or during a controlled, offline recovery process.
• Leaving large balances on hot mobile wallets. Reserve hot wallets for spending amounts.
• Sharing addresses repeatedly. Use a new address for each receive to limit the visibility of your holdings.
• Rushing firmware updates. Read release notes and update during a calm window after confirming backups.

A simple migration timeline you can follow

• Day 1: Initialize wallet, back up seed, pick bc1q address, and run a 50 to 200 CAD test send.
• Day 2: Verify test confirmation count reached three or more. Rotate to a new receive address and perform the full withdrawal if ready.
• Day 3: Document your setup, confirm backups, and store logs securely.
• Quarterly: Do the 3‑minute check and a brief recovery rehearsal without exposing the full seed.

Frequently asked questions

How many confirmations do I need?

For personal transfers to your own wallet, one confirmation is often fine. For peace of mind when moving your full balance, wait for three or more. Institutions sometimes wait for six.

Should I use Taproot addresses?

Taproot provides benefits for advanced scripts and some privacy scenarios. If both your exchange and wallet support Taproot for deposits, it is a good modern default. If you are unsure, choose native SegWit bc1q for broad compatibility and efficient fees.

What if my exchange only withdraws to legacy addresses?

Most Canadian platforms support modern formats. If you encounter limitations, you can create a compatible receive address in your wallet for that one transfer, then later move coins within your own wallet to a modern account path.

Do I need a metal seed backup?

It is strongly recommended for long‑term holdings. Paper can burn or degrade. A well‑made steel backup survives fire, flood, and time. If you start with paper, plan to upgrade when convenient.

Can I split my seed phrase between two places?

You can split, but do not simply store half the words in one place and half in another without understanding the risks. If either half is discovered, it can leak information about your mnemonic. Consider using a passphrase or a proper multisig instead of naive splitting.