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The crypto space is vast. One cannot simply know everything. Where the knowledge of one stops is the beginning of another's. Someone like me who started cryptocurrency on Binance exchange never knew that, even though it is secure, it was better for me to save my coins and tokens in a wallet. I remember the times I had to wait and wait for a coin which have dumped so much to come up. During those times, I simply let go of trading and continued to watch the coin rise and dumb. Some of such coins I waited to come back up were delisted. I suffered loss and lamented. Thereafter, I continued to trading.
Verified Centralized Exchanges like Binance, KuCoin, and Huobi are best for making technical analysis and simply trading because they can give the full details of the market of a coin. They are not designed to hold coins and tokens for long. Wallets serves this purpose better and because they are better secured, should be used except one wants to consistently trade after getting adequate knowledge of the market situations.
Even though Exchanges and Wallet are similar when talking about cryptocurrencies, their seem to be so much different. In this post, I shall highlight some of the areas where exchanges and wallets can be in contrast and compared.
CONTRASTING CRYPTO EXCHANGES FROM WALLETS
A Cryptocurrency exchange is simply a platform (software application) which serves as the market for trading (buying & selling) of different cryptocurrency. An exchange holds diverse number of Cryptos and provide liquidity through order books (for centralized exchages) and liquidity pool (for decentralized exchanges) for traders and holders. This tells us that their are centralized exchanges and decentralized exchanges.
On the other hand, a crypto wallet is simply a platform (of different types) used for the storing/saving cryptos/tokens and holding them. Crypto wallets are of different types. There is the mobile wallet, Paper wallet, digital wallet, hardware wallet and desktop wallets.Because exchanges are software applications, at all times, they need active internet connections to function while not all wallets requires active internet connection to function, e.g hardware, and paper wallets.
Crypto exchanges serves as a house for wallets. They need wallets to be able to list and hold cryptocurrency in them while wallets are self sufficient as they are the main house of digital currencies and therefore do not need exchanges to be able to work.
The security of cryptocurrencies in exchanges is weak. Cryptos can be delisted, an exchange can cease to exist or a owner of an account can be deprived access because the exchange holds the Private Key of the account. If any of these happens one may lose one's asset. On the other hand, wallets have a stronger security as the Private Key of each wallet is held by the owner. There is no delisting of cryptocurrencies.
To secure an exchange account, especially centralized exchange, one needs to keep the password well and away from others. Then if the account is secured by Google Authentication, the application should be kept private from others on phone or personal computer to secure the account. On the other hand, to secure a wallet, both the seed/mnemonic phrase and Private key should be kept away from the reach of others.
Examples of exchanges are Binance, Huobi, and TronLink while examples of wallet are Trustwallet, and Metamask.
Comparing Exchanges and Wallets.
- They are both cryptocurrency platforms that can be used to save and hold crypto/tokens.
- They both have security measures that helps them to be secure.
- They can both hold multiple cryptocurrency at a time.
- Decentralized exchanges also takes the form of some wallets.
- Cryptos can be sent from an exchange to a wallet and vice versa.
In conclusion, exchanges and wallets in crypto have so many disparities. Some my mind may have reasoned in this post but I have done well to list the most valid. They are different platforms does not stop them from having areas in common.
I hope that this post enlightens a reader.
Thanks for reading and do have a good time impacting and gaining knowledge here.
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