As a trader it is good to understand the difference between Crypto Exchange Vs Wallet before starting your journey of investing in the crypto world, you will be required to choose between an exchange platform or a wallet. They both will help to store your cryptocurrency but they are entirely different and also hold separate benefits and disadvantages.
What is a Crypto Exchange?
A crypto exchange is a platform that enables investors to trade cryptocurrencies. This platform serves as a market that helps to connect customers to trade their digital currencies for other assets.
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What is a Crypto Wallet?
A crypto Wallet is a program or service that helps to store the keys for cryptocurrency transactions. This also allow users of cryptocurrency to easily retrieve their digital assets.
Why do You Need a Crypto Wallet?
Having a secured cryptocurrency wallet serves same function as having a normal wallet, where you store your cash and other items but having a crypto wallet is essential for keeping your digital assets.
Also, having a wallet will enable you perform various crypto-transactions, while keeping a close watch on your balance and also allow you have the ease of withdrawing whenever you want.
What is The Difference Between Crypto Exchange Vs Wallet
Crypto exchange and wallet both serves as a means for which digital currencies are being stored and accessed but there are some things that differentiate them. These includes :
- Definition
A cryptocurrency wallet is a program that enables the investors to store all their cryptocurrency While on the other hand, a cryptocurrency exchange is a platform where an investor can sell or buy digital currencies and also convert fiat currency into digital currencies.
- Control Over The Private Keys
Having a crypto wallet will allow you have full and complete control over your private keys. This key is the only way you gain access to your digital assets, so once you have complete control, it makes it more safe and reliable for you to store your cryptocurrency on it.
crypto exchange does not allow you have a full and complete control over your funds, in other word, you can decide where to sell or buy digital assets, but there may be some restrictions in the process.
- Purpose
A crypto wallet is designed for long term storage, ease of access and with high security. It is safer and secured for you to keep your funds because it gives you the ability to incorporate some form of backups in case of any failure.
A crypto exchange serves as a route where the wallet can be integrated and made to engage in trading and it also makes using the wallet easy.
- Other Features
Cryptocurrency wallet does not offer other features such as selling, buying or trading while cryptocurrency exchange serves the purpose of selling, buying and trading in various digital assets.
What is The Best Place to Keep Your Cryptocurrency?
Keeping your cryptocurrency on an exchange platform is suitable and a good idea if you are planing on buying and selling crypto as they fly. But with a high number of critical hacks in the space, an offline non-custodial wallet is far more secured for you to use.
Your cryptocurrency is only safe when you use a reliable and trusted method to store and keep it, exchanges are the least secured venue to store your crypto while offline wallets are the safest.
Both methods have their merits and flaws and the best option is, for long-term holdings it is better to store your cryptocurrency in a crypto wallet while for short-term traders with an open position, keeping it on the exchange is the smarter option.
A crypto wallet and exchange both serves same purpose in terms of storing your cryptocurrency but whether you decide to store your crypto on an exchange or in a wallet is entirely down to you.
However, storing your digital currency on an exchange could see you lose all your digital currency if the exchange is hacked. Also, storing your digital currency on a wallet, will have you dealing with issues such as backing up, securing and managing your wallet. So before opting for a wallet or exchange, always evaluate the risks.
We hope this article will help you make a good decision on the best platform to use in storing your cryptocurrency. If there be any contribution, kindly drop your comments in the comment section.
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