Exchange wallet or your own wallet?

Keeping crypto on an exchange is convenient; holding your own keys gives you control. The trade-offs, in plain language.

There are two ways to hold crypto: let a company hold it for you (custodial), or hold the keys yourself (self-custody).

Exchange (custodial) wallets

• Easy to use, with password reset and customer support.
• Needed for trading and P2P.
• But the exchange controls the coins. If it is hacked, goes bankrupt or freezes your account, you may lose access, as customers of FTX learned in 2022.

Self-custody wallets

• Apps like Trust Wallet or MetaMask, or hardware wallets like Ledger and Trezor.
• Only you control the funds, through your seed phrase.
• But there is no one to call if you lose the phrase or send to the wrong address.

A practical middle ground

Many people keep a small trading balance on an exchange and move long-term savings to a self-custody wallet, ideally a hardware wallet for larger amounts. Whatever you choose, turn on two-factor authentication and never reuse passwords.