Most people are often confused about these two vital means of storing cryptocurrencies which are Crypto exchange and crypto wallet, simply because both are vital means through which we can buy, send, and store cryptocurrencies. Here, in this post, you going to know how they both function which makes them different.
| What cryptocurrency exchange means |
|---|
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"Cryptocurrency exchange" is not much different from stock exchanges because they both help investors and traders to buy and sell digital assets whenever they want. This means a cryptocurrency exchange is a platform/services that provides investors and traders an easy means of buying and selling cryptocurrencies such as Bitcoin, Ethereum, Steem, USDT, Tron, etc without stress.
A crypto exchange is just like a bank which helps us to store money, transfer money, receive money, and so on. Crypto exchanges are focused on a digital marketplace for investors and everyone other people to have access to. Most crypto exchanges provide both mobile app and website services to users and as such a means of trading and investing.
One of the ways that crypto exchanges and crypto wallets made a profit is via charging of transaction fee for the transaction which is carried out by users based on the amount of transaction. Some exchanges charge 0.2% for transactions.
| Cryptocurrency Exchange Types |
|---|
Centralized and Decentralized exchanges are the two types of cryptocurrency exchange. Going by this
Centralised Exchange
A centralized crypto exchange is the type of exchange that has more functionality (features) than a decentralized crypto exchange. As it is called centralized exchange it means it has a centralized authority that controls the exchange.
Simply put, it is the type of exchange that allows you to buy crypto using your Fiat currency and provides you with trading tools, and other services such as spot trading, futures trading, swapping, selling of your cryptocurrencies for first currency, and so on.
| Merit | Demerits |
|---|
| It has great liquidity and trading features | It can easily be hacked as user information is stored in a centralized exchange |
| You can easily recover your fund when you make an error in sending. | Trading volume is hype, and trading fees it high. |
A decentralized exchange is the opposite of a centralized exchange which gives you the freedom to operate your wallet as you like. Everything about a decentralized crypto exchange is anonymously done.
DEX doesn't require you to do KYC before using the exchange for storing, sending, and receiving cryptos. Decentralized has a feature that makes the exchange more complicated and it doesn't require your data, but gives you a private key or phrase key that makes it difficult to hack.
| Merit | Demerit |
|---|
| You have full control over your funds | The liquidity is low |
| It gives you more security and privacy | Losing your private or phrase key means losing your fund |
| What Cryptocurrency Wallets Means |
|---|
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As we have read earlier crypto wallets and crypto exchanges are two different things and you're going to know the difference between the two. However, before that let's take a brief look at what crypto wallets mean.
A crypto wallet is a service, program, device, or Platform that helps investors and traders to store their cryptos. Crypto wallet provides you with public and private keys that are more of encryption. In a crypto wallet, you can't sell your crypto for Fiat currency, but you can send receive, and store your cryptocurrencies in it.
| Types of cryptocurrency wallets |
|---|
- Paper wallets (Cold wallets)
- Hardware wallets
- Online Wallets
| Difference Between Crypto Exchange and Crypto Wallets |
|---|
We will be looking at the difference in a tabular form.
| Cryptocurrency Exchange | Cryptocurrency Wallets |
|---|
| Crypto Exchange helps us in facilitating crypto-based trades at our convenience | Crypto Wallets help us to store our crypto, send and receive |
| Crypto Exchange may not require you to use private keys | Crypto makes use of private keys |
| Crypto exchange allows us to trade crypto for Fiat and fiat for crypto | Crypto Wallets only help us to store crypto and not fiat. |
| It supports the storage of certain cryptocurrencies | It supports any cryptocurrencies that can be stored in a wallet. |
| It provides you with trading, staking, lending borrowing, etc | It doesn't have the features of a spot of future trading, etc. |
Crypto exchange and wallets are the two methods of storing our cryptocurrencies this post has helped you to understand the difference between the two wallets which often confuse people most time.
Reference, Reference, Reference
Hello @josepha
The distinction you make here is important, because just as there are centralized exchanges, there are decentralized ones, to operate in the latter it is necessary that we know how to use a wallet like Metamask, for example.
This is part of the step that must be taken to educate users so that the crypto environment has more users, and the entire crypto market is strengthened.
Both Wallets are good, but understanding their differences will help einen to choose the right one for storing, sending, receiving of cryptos and so on. However, cryptocurrency exchange has more features over cryptocurrency wallets. Thank you for stopping by.
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As a neutral user, I currently use a centralized exchange because I trade derivatives and it is easy to make withdrawals into my bank account.
This review is clear enough for our friends to understand the differences between the two.
Centralized has more features than a decentralized exchange. Thank you for stopping by.
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You have given nice distinction between crypto exchange and crypto wallet.
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