I've got a decent amount sitting on Coinbase that I'm planning to hold long-term. A friend keeps telling me to get it off the exchange and onto a Ledger or something similar, but I'm worried about losing my seed phrase or messing up the transfer. Is it really necessary if I trust the exchange, or am I taking unnecessary risk keeping it there?
Moving it off the exchange is genuinely the safer play for long-term holding, even if Coinbase is pretty reputable. The thing is, you don't actually own the crypto sitting on an exchange - the exchange owns it and you've got an IOU. If something goes wrong with their security, gets hacked, or they have legal/financial issues, your funds could be at risk. There's also the regulatory angle where frozen accounts happen. A hardware wallet puts you in control, which is the whole point of crypto.
The seed phrase worry is real but manageable. Write it down on paper, store it somewhere secure (safe deposit box, home safe, whatever), and don't photograph it or put it online. That's honestly the hardest part. The actual transfer is pretty straightforward - generate a receive address on your wallet, send your crypto to it from Coinbase. Takes maybe 10-20 minutes and a transaction fee. If you're nervous, do a small test transfer first to make sure you understand the process before moving everything.
For long-term holding you're probably looking at years of not touching it, which means an exchange getting compromised is a real risk to sit with. Hardware wallets aren't perfect either (you can lose the device, forget the seed phrase), but at least the failure mode is on you, not some company. It's more peace of mind than anything, but after a while that peace of mind matters.
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