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Hard Drive or Cloud Backup

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I am trying to decide if I should backup to a USB External Drive or the Cloud.
Does Acronis work on both?
Which is the better method, incremental or differential?

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I backup to external USB hard drives. Some people prefer the cloud. You may use both.

As for incremental or differential, you must decide what best fits your needs. I personally prefer to create only full backups.

A task for Incremental or Differential will always begin with a full backup. That is necessary, as that becomes the baseline.

For an Incremental task, after the first full backup, subsequent backups will be incremental, each one based on changes since the previous Incremental backup, all the way back to the second backup being incremental based on changes since the full backup. As such, you need all links in the chain, all incremental backups right back to and including the first full backup, in order to Restore.

For a Differential task, after the first full backup, subsequent backups will be differential, each one based on changes since the first full backup. To restore, you would need just any Differential and the Full backup on which it is based.

You should not allow an incremental chain to become too long. An incremental restore depends upon every incremental in the chain being valid, including the original full. It's better to limit each chain to just a few incrementals, followed by a fresh full backup to start a new chain.

You should validate backups periodically. That would alert you much if the full backup were missing or unreadable.