Crypto Academy Season 3: Week 1 – A world of Wallets and Exchanges – by @allbert

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 blockchain wallet is definitely one of the most important aspects of as far as blockchain and cryptocurrency is concerned. Anyone who has come across blockchain cryptocurrency have heard about wallets. A cryptocurrency wallet is for storing cryptocurrencies. It functions as a gateway that connects to the blockchain network in order to access the stored cryptocurrency assets on the blockchain using the keys. Whenever a wallet is mentioned, there are many types cryptocurrency wallets… software wallets, hardware wallets and paper wallets.

Software Wallets

A software wallet simply means a cryptocurrency wallet that is written as a program that can be installed on a specific device such as mobile and desktop for interacting with the blockchain and storing cryptocurrency. Software are very popular and common and it is preferred by many as a secure way to store cryptocurrency assets. Most software wallets are very easy to use and are also free which means that anyone can download and install their preferred software wallet of choice. Example are Trustwallet, exodus wallet, coinomi wallet, atomic wallet, enjin wallet etc.

Web wallets

A web wallet simply means a cryptocurrency wallet is runs online on servers and can only be accessed using a web browser. Web wallets are the most common wallets because of their ease of use and accessibility. Anyone can have access to a web wallet from any web browser. This is good because it doesn’t require any specific device to access them, any device that has a browser and can connect to the internet can have access to web wallets. Example are nimiq wallet, myetherwallet etc.

Hardware wallets

A hardware wallet simply means a cryptocurrency wallet that is created as a physical object but made specifically to interact with a blockchain network and store cryptocurrency assets. A hardware wallet can also be multichain which means that it can interact with multiple blockchains and store multiple cryptocurrencies assets. Hardware wallets are less common because of their price. Hardware wallets are one of the most secure types of wallets because they don’t live online or have access to the internet. Example Ledger wallet and trezor wallet are the two popular hardware wallets.

What is an Exchange?

An exchange is also one of the most important aspects of as far as cryptocurrency is concerned. Anyone who has come across cryptocurrency have heard about exchanges. A cryptocurrency exchange is for buying and selling cryptocurrencies. It functions as a platform that connects buyers and sellers to trade cryptocurrencies. Whenever an exchange is mentioned, there are many types cryptocurrency exchanges… centralized exchange and decentralized exchange. An exchange is simple an online platform that allows people to buy and sell cryptocurrencies. The aim of an exchange whether centralized or decentralized is to connect buyers and sellers to exchange cryptocurrencies. Example of exchanges are Coinbase, Binance, Kucoin, Uniswap, Kraken etc.

Differences

A wallet is for storing cryptocurrencies while an exchange is mainly for trading cryptocurrencies.

A wallet is decentralized which means that the users have control of their assets. While exchanges is does not give users control of their assets.

A wallet wallet does not have an order book while an exchange has an order book

There are no KYC required to use a wallet. While there are some exchanges that require KYC to use the exchange

A wallet does not need users to create accounts. While an exchange needs the users to create account before using the exchange.

A wallet runs on the blockchain and acts as a gateway to access the cryptocurrencies on the blockchain. While an exchange runs on servers.

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

The main operation that should be performed in a wallet in terms of fees is for storing cryptocurrencies, sending cryptocurrencies from one wallet to another wallet. The fees to send cryptocurrencies from one wallet to another wallet is lesser than on exchanges. When it comes to storing cryptocurrencies and sending cryptocurrencies, the operation should be performed on a wallet.

The main operation that should be performed in an exchange in terms of fees is for trading cryptocurrencies and exchanging from one cryptocurrency to another. The fees to trade cryptocurrencies on an exchange is lesser than swapping on wallets, this makes exchanges suitable for trading operations. When it comes to trading cryptocurrencies and exchanging from one cryptocurrency to another, the operation should be performed in an exchange.

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?

Having more than one exchange account is very common in the crypto world for a few reasons. some of the main reasons why people should have more than one exchange account are;

Risk management
This is because it is not a good idea to put all your eggs in one basket. It is important to have risk management and not put all your investments in one exchange so that if anything happens to the exchange, you still have some funds on other exchange accounts. Diversification is key. It is good to spread out investments capital on more than one exchange accounts

Capitalizing on investment opportunities
This is another reason why people should have more than one exchange account. Some very good coins with great potential are listed on certain exchanges, which means that having more than one exchange account gives you the chance to invest in these coins and capitalize on the opportunities.

Capitalize on higher staking APY
This is another very good reason why people should have more than one exchange account. Some exchanges offer higher staking APY which means that having an account on that exchange allows people to stake their coins and earn higher yearly rewards.

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

I have an exchange account. I created my first exchange account years ago when I joined cryptocurrency. At the moment, I use a variety of exchanges to buy and sell cryptocurrencies depending on the cryptocurrency I want to buy and sell. Huobi is one of my favorite exchanges because of its ease of use and amazing features on the exchange.

What are better? Wallets or exchanges?

Wallets or exchanges?

For me, wallets and exchanges have their use. Both wallets and exchanges can be used to perform similar operations, however, each have their own benefits. A wallets main operation is to store cryptocurrencies and for sending and receiving cryptocurrencies. While an exchange main operation is for trading cryptocurrencies or exchanging one cryptocurrency to another cryptocurrency. For me, I would say wallet is better because without the creation of exchange, people can still trade cryptocurrencies in a peer-to-peer manner.

Create an account in a wallet and in an exchange of your choice and show screenshots of the process

Creating a Myetherwallet Wallet

To use myetherwallet, go to the website which is https://www.myetherwallet.com … make sure that you are visiting the correct website

On the homepage, click on “create a new wallet” button

1. The next page, choose the method to access your wallet. I choose “By Mnemonic Phrase” method

Your 12 word seed phrase will be shown, write it down and keep it safe.

After writing down your 12-word seed phrase,

Click on the “I wrote down my mnemonic phrase” button and move to the next page for verification

This stage will ask You to randomly provide some of the words in your 12-word seed phrase and type them in their correct number position.

Click on the “verify” so as to complete the verification step

Success!
You can now click on “unlock wallet” to unlock your wallet using your 12-word seed phrase.

Creating a Houbi Exchange Account

To use the huobi exchange, go to the website which is https://www.huobi.com … make sure that you are visiting the correct website

Go to signup and create the account. Fill in your email address and password and confirm the password. Make sure to use a strong password for stronger security.

After filling in your details, click on signup. In your email inbox, verify your huobi account. Once you are done with the verification, your account is created.

Go to login, enter your email and password to login into your huobi exchange account.

Conclusion

A blockchain wallet is definitely one of the most important aspects of as far as blockchain and cryptocurrency is concerned and it is for storing cryptocurrencies. An exchange is also one of the most important aspects of as far as cryptocurrency is concerned. Anyone who has come across cryptocurrency have heard about exchanges. A cryptocurrency exchange is for buying and selling cryptocurrencies. When it comes to exchanges, having more than one exchange account is important and very common in the crypto world for a few reasons like risk management, higher earnings on staking and more. Wallets and exchanges have their use. Both wallets and exchanges can be used to perform similar operations, however, each have their own benefits.

Task post for @allbert