When you keep your cryptos on an exchange, you’re trusting the exchange to keep your money safe. There may be a chance that the exchange gets hacked or goes out of business. This will make you lose your funds. We all know that exchanges are online 24/7 which makes them a constant target for cyberattacks.
On the other hand, crypto wallets give you more control over your money. There are different types of wallets, but two common ones are hardware wallets and software wallets. Hardware wallets help you to store your cryptos offline. This reduces the chance of being hacked as they’re not connected to the internet. Software wallets can be online or offline and many of them have strong security features like encryption and passwords.
Crypto wallets generally provide your own private keys, which are like secret codes that control access to your crypto. Without these keys, no one can access your funds. This is different from exchanges, where the exchange holds the keys for you.
On the whole, compared to exchanges, crypto wallets give you more control over your digital assets and can be a better option if you manage them properly. While exchanges offer you the convenience of trading, using a dedicated crypto wallet is generally a safer option for the long-term storage of your cryptocurrencies.