Exchanges use cold storage and insurance for most funds, but self-custody in a hardware wallet removes counterparty risk entirely. For balances you're not actively trading, moving funds off-exchange is generally the safer choice.

A hot wallet stays connected to the internet for quick transactions, while a cold wallet keeps your private keys fully offline. Cold wallets are best for long-term holdings; hot wallets suit everyday spending and trading.

In most jurisdictions, swapping one cryptocurrency for another is a taxable event, not just cashing out to fiat. Each trade can trigger a capital gain or loss that needs to be tracked and reported separately.

Blockchain transactions are irreversible, so funds sent to an incorrect address typically cannot be recovered unless you control that address or the network supports rare recovery tooling. Always double-check the address and network before confirming a transfer.