Crypto Academy / Season 3 / Week 1 - Homework Post for @allbert

Cryptocurrency Wallet

A cryptocurrency wallet is a program, application, or device which stores cryptocurrencies and offers a variety of keys that give authority and access of the wallet to the wallet holder. The main use of a cryptocurrency wallet is seen in its definition: as a medium for storing cryptocurrencies. Wallets are grouped into cold wallets(offline) and hot wallets(online). Examples of wallets are Trust Wallet, TronLink, Trezor, Ledger, etc.

Exchange

An exchange is a platform which offers a medium through which a cryptocurrency can be exchanged for another cryptocurrency or fiat currency. Exchanges always have inbuilt wallets where cryptocurrencies can he stored for any activity on the platform. Examples are Binance, Poloniex, Coinbase, Kraken, Huobi, etc.

Operations Performed in Exchanges and Wallets

Wallets

• Wallets are mainly used as a storage medium for cryptocurrencies.
• Transactions involving digital currency are also done using wallets
• Some online wallets offer a medium of exchange. An example is Uniswap. This function is only accessible if the wallet is compatible with dApps (Decentralized Applications).

Exchanges

• Just as the name implies, the major use of an exchange is as a medium for trading cryptocurrencies currencies. Cryptocurrencies are exchanged for fiat currency or other digital assets in an exchange.
• Exchanges also offer wallet capabilities. Cryptocurrencies can be kept in the wallet of an exchange if they're not being traded at the moment.

Differences between Exchanges and Wallets

Wallet	Exchange
Main function is as a medium for storing cryptocurrencies	Main function is as a medium for trading cryptocurrencies
No fees are incurred for using a wallet. Fees are only incurred for transactions. These transaction fees vary depending on the cryptocurrency that is being transacted	Fees are incurred for most activities in this platform. Exchanges charge users for interacting with the platform in areas ranging from deposit to trading. The fees vary depending on the Exchange in use.
No level of KYC (Know-Your-Customer) is required when using wallets. Wallets offer keys or seed phrases to new users that open an account. These keys and seed phrases would be used for access to activities on the wallet.	Exchanges require a level of KYC for access to activities in the platform. Legal documents would be required for confirmation of identity when opening and accessing an account.
High security is offered in wallets	Less security is offered in exchanges compared to that of wallets.

Why everyone should have more than one Exchange Account

Unlike cryptocurrency wallets, exchanges cannot boast of maximum security. There have been times when an exchange has been hacked, and had a lot of funds stolen. An example is the Binance hack in the early months of this year. For this reason, it is advisable to have multiple exchange accounts.

The volume and fees that exchanges offer is also a reason to have multiple exchange accounts. The volume is simply the liquidity offered by an exchange. This also means the availability of a cryptocurrency. An exchange with low volume would incur high fees. If an exchange has high volume, the fees on the exchange would be low.

The cryptocurrencies that are available on exchanges vary. Having multiple accounts on different exchanges would mean that a person would have more access to cryptocurrencies that can be traded.

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^{Taken from Coingecko}

I have a Binance account which I created in January when I started by crypto journey. Why did I choose Binance?

• Binance is a centralized exchange that has the title of the top ranking cryptocurrency exchange in the world. It has a volume of $19,527,753,452. I chose to have a Binance account because of its popularity

• Another reason why I chose Binance is because it supports a vast number of cryptocurrencies.

• Binance doesn't impose outrageous fees on its users. This is another reason why I chose Binance.

• The Binance platform is very user friendly and doesn't take much to get used to. This made the platform very attractive to me, making me to open an account on the platform.

Which is Better, Wallets or Exchanges?

Wallets and Exchanges are both good in their use cases. A wallet is specifically made for storing cryptocurrencies. Wallets offer high security which makes it better than exchanges for storing cryptocurrencies.

On the other hand, an exchange is simply a market place for cryptocurrencies. Although an exchange would have a wallet built with it, it's main purpose isn't for storing cryptocurrencies.

In my opinion, the question "which is better" is faulty because these two units have different uses. Nonetheless, a wallet is better when it comes to security.

Step-by-step Process in Creating an Account on Trust Wallet on Android

Step 1: Go to Play Store and Install Trust Wallet.

Step 2: Open the app and select "CREATE A NEW WALLET"

Step 3: Tick the box and select "Continue".

Step 4: Copy the recovery phase and select "Continue".

Step 5: I was asked to arrange the recovery phase in this step. Select "Done" after arranging the words.

Step 6: Wallet has been successfully created. Select "Done".

Note:

Due to Android's policy on privacy, I couldn't make a screenshot of the 4th and 5th step.

Step-by-step Process in Creating an Account on Kucoin on Android

Step 1: Go to Play Store and install Kucoin.

Step 2: Open the app. Select the profile icon at the top left corner.

Step 3: Select "Log In".

Step 4: Select "Sign Up".

Step 5: Input email address and select "Send" to receive verification code.

Step 6: Complete puzzle to get verification code.

Step 7: As I typed in the verification code, I was automatically taken to a new page. Create password and select "Sign Up".

Step 8: Option to enable touch ID. Select "Activate Now".

Step 9: Account creation has been completed.

Conclusion

Cryptocurrency wallets and exchanges are very versatile. Exchanges are used for trading whereas wallets are used as a safe for cryptocurrencies. It is known that both units offer the services of the other in way, but they're best suited for what they are created for.

Special thanks to @allbert