Crypto Academy Season 3 | Intermediate course by @allbert -Task 1: A world of Wallets and Exchanges

in SteemitCryptoAcademy3 years ago

Hello fello student of the cryptoacademy. My sincere appreciation goes to the professor @allbert who have put everything that is needed for this lecture together.

Here is the homework post by me @ayoyemi

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Image source

1- Explain differences between wallets and exchanges as well as mention which operations should be performed in an Exchange and which operations should be performed in a wallet (in terms of fees).

What is a wallet?

A wallet, or digital wallet, is a digital location where you can store your cryptocurrency, similar to how bank accounts are used. Depending on whether or not they have an Internet connection, many types of wallets exist, such as cold wallets and hot wallets.
The security of a wallet is unaffected by whether or not it is connected to the internet, which means there is no difference in security between using a cold wallet and a hot wallet. However, it is important to note that no matter how secure a wallet is, if the owner shares its keys (both public and private), the account's security is already jeopardized.

What is an Exchange?

An exchange, often known as a market, is a platform (typically a regulated website) where you may swap your fiat cash for cryptocurrencies and vice versa, paying market rates and always aiming for the biggest potential gains by following the free offer and demand principle.

An exchange not only connects people who want to sell their currencies with people who want to buy them, but it also serves as a platform that facilitates this exchange while also providing security and confidence to its users to ensure that all transactions are completed.

Difference between Exchange and Wallet.

  • The major distinction is fairly straightforward and is part of the utility of each of them:

  • Another important distinction is the types of wallets available; while you can keep your cryptocurrencies safe without an internet connection, this is not possible with exchanges because you cannot conduct any transactions off line, which means you will always need an internet connection to use an exchange.

  • There is also a great distinction between them in term of security. Wallet is more secure with the use of Private keys and recovery phrase which make wallet free from hijackers, but exchange is more exposed to the risk of hijackers.

  • Transaction fees: The transactional fees in wallet is always higher that the fees in exchange.

Which operations should be performed in an Exchange and which operations should be performed in a wallet (in terms of fees)?

Wallet is used to store and govern the cryptocurrencies that we own, whilst an exchange is used to perform financial transactions with them, i.e., to swap them for fiat currency or other cryptocurrencies.
Even though there are some wallet where swapping can be done, but the fees that this kind of swapping will attract will be much compared to if we do it on an exchange.

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2b- In your own words, Why You think people should have more than one exchange account?. Do you have an exchange account? and Why that specifically?

It is advisable not be obsessed on a single platform because certain platforms provide benefits that are not available on others. Furthermore, the price of a cryptocurrency on one exchange site against another exchange site may differ, as well as the fees imposed, making it beneficial for us to have multiple exchange accounts.

The greatest approach to stay safe is to diversify our investments. I.e to spread our asset and not put all our eggs in one basket. Account can be hacked on any Exchange and it may cause us to lose all of our assets, therefore, the best thing to do is to spread our asset to other platform.

Do you have an exchange account? and Why that specifically?

I am operating 3 accounts presently on Binance, Huobi and kucoin.
Below is the screenshot on one of my accounts

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Source

The main reason for opening this exchange account is to be able to buy other cryptos with my steem token and to also buy steem with both fiat and other cryptocurrencies. I started reading with steem at the begining, but now I have other assets that I that I trade with

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3- What are better? Wallets or exchange.

There is an adage that says "What is facing a person, may turn it's back to another person".
The answer to this question depends on the choice of the user. If you are someone who just want to buy cryptocurrencies and store them, you'll be needing a Wallet; because they provide outstanding protection and ensure that your assets are ever safe and never lost; It is now left to the user to choose the type of wallet that suit his/her taste.

However, if you are a user who intends to trade cryptocurrencies, you should just go for an exchange because they provide all of the necessary tools. Exchange also charge less for such cryptocurrency trading in terms of fee. Even though exchanges differs, you will make your research and go with the one that suit you..

They are both useful, and none is better than the other. We just need to make use of each of them in the right manner for us to enjoy them properly
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4- Create an account in a wallet and in an exchange of your choice and show screenshots of the process.

How to create an Exchange account (KUCOIN)

  • Step 1: Visit (m.kucoin.com) and click on the sign up from the left top menu as shown in the screenshot below.

IMG_20210701_150840.jpg

  • Step 2: Choose the sign up option, either the email or phone number. I am using email in this procedure as shown in the screenshot below.

IMG_20210701_151057.jpg

  • Step 3: Fill up the Email to sign up with and fill the code that has been sent to the email in the space provided and press "next" as shown below.

IMG_20210701_151307.jpg

  • Step 4: Reset the password for the account that you will be using to log in to the account and then press "submit". This password should be properly kept safe

IMG_20210701_151508.jpg

  • The account had been created and one can now start trading with the new account created.

IMG_20210701_151558.jpg

How to create Wallet account (Atomic wallet)

  • Step 1: Download the Atomic wallet from the play store and open the application as shown below.

IMG_20210701_161011.jpg

  • Step 2: There will be two section from the right and the top corner of the screen, The one at the left is to create new account and the right is to restore existing account. We will click on create new account as shown below.

IMG_20210701_161153.jpg

  • Step 3: The next thing is to set up the password for login and other transaction that requires password. The password must be kept safe.

IMG_20210701_161314.jpg

  • Step 4: This is another important steps that need proper attention. This is where the recovery phrase is shown and the phrase is to be written offline. The recovery phrase is what we will need to open our account on another device, it must be kept safe. After doing that, then we will click on start using "Atomic wallet".

IMG_20210701_161605.jpg

  • And the account is ready to be used. The menu icon is below the screen. We have the wallet, history, Exchange, buy and stakings.
    IMG_20210701_161706.jpg
    All image source

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CONCLUSION

My recommendation is that everyone interested in trading crypto should have both a cryptocurrency wallet and an exchange. What we need to do is keep only the amount of coin we need for trading at the time that we need it in our internal exchange wallet, and the one we want to hold should be in our hardware wallet.

We should make use of the Exchange as the trading platform only and not a place to store our asset for a longer time.

Thank you @ayoyemi

cc:
@steemitblog
@steemcurator02
@allbert

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