Where Should You Store Your Crypto?

First you need to understand how crypto tokens and coins work. Your coins are always stored on the blockchain, all you are storing in a wallet are the keys that allow you to access these coins. Whoever has access to these keys also has access to your coins.  Always keep your recovery/secret phrases safe, never give them to anyone and store offline so they can not be hacked.

Exchanges

Exchanges are a place to trade one coin for another and deposit or withdraw fiat currencies, but they can also have other options like staking and savings accounts where you can earn interest on your coins. This can have advantages over staking from within your own wallet, like the minimum stake amount may be a lot less than what you need if you were to stake yourself and the lock up period of your coins may be less also, allowing you access to your coins quicker if there are huge market movements. You also have the advantage of having your coins already on the exchange to take advantage of big price movements before they are gone without having to pay transfer fees or wait for blockchain confirmations if you were transferring to the exchange from another wallet.

On the downside you do not own the keys to your coins held on an exchange.  If the exchange goes out of business, gets hacked or just decides to run off with your coins you are at risk of losing your coins. There are usually also minimum amounts of a coin you can deposit so you can not use these accounts for faucet collections etc.

Exchanges can be ok for holding smaller amounts as long as you understand the risks and are ok with the exchange owning your keys and allowing you to access them through their site. I would recommend using well established exchanges like Binance or Crypto.com if you are going to hold coins on exchanges.

Hot Wallets

Hot wallets are online wallets, with most wallets you own the keys to access your coins and are given a recovery phrase when you create your wallet so you can access it from any device with this phrase. This also means anyone else can also access your coins with this phrase so keep it safe. As hot wallets are online they are open to hacking so I wouldn't recommend storing large amounts here.

Most wallets do not have minimum deposit amounts, so you can use these to collect small amounts of coins that might be below the minimum for an exchange wallet. My personal wallet of choice for collecting small amounts is the crypto.com app, this is linked to the crypto.com exchange so you can move coins between the two at no cost and you have the option to convert small amounts of coins to CRO, their native token if you do not have enough to trade. I also use Metamask for airdrops, although i try not to hold much in my Metamask wallet and any coins are transferred out when I receive them.

With most wallets moving coins to another wallet will incur transaction fees and require waiting for blockchain confirmations before your coins arrive.

Cold Wallets

Cold wallets are usually a piece of hardware, but can be as simple as a piece of paper. These are the most secure wallets as they are stored offline so can not be hacked. Always keep your recovery phrase for a cold wallet stored offline safely so it also can not be hacked.

Cold wallets are where you should be storing large amounts of coins. You can even stake and earn interest on proof of stake coins from within some hardware wallets.

There are a variety of hardware wallets you can choose from, my personal choice is Ledger as I can keep my Polkadot, Cardano and Tezos safely here and still stake them. There are other coins you can stake but those are the 3 I hold for staking.

You do have to pay transaction fees and wait for blockchain confirmations to transfer coins to and from a hardware wallet and you also need to connect the device to confirm the transaction as your keys are stored on the device.

I will write a full guide on Ledger soon, but if you can't wait you can get a 20% discount on your Ledger purchase by clicking here