Crypto Wallet and Crypto Exchange

When you hear of a wallet, your mind flash back to the most popular wallet known as trust wallet not so? Could this be a crypto wallet? Yes it is? Why is it called a crypto wallet and how does it differ from a crypto exchange? These questions would be answered in the course of this article and more light would be shed on how crypto wallet works.

A crypto wallet is more like a digital tool operated online. Just like the steemit wallet we have and its keys used to store, manage, transfer and receive steems and Steem power including trons, a crypto wallet is a tool used to send, receive and store cryptocurrencies like Ethereum or dollars of which it has a wallet address and private key used in carrying out these transactions. This crypto wallet has various types of wallets ranging from software wallets to paper wallets.

A crypto exchange is a platform where one can trade cryptocurrencies, buy and sell it from and with other users acting as an intermediary which binds buyers and sellers together for the purpose of trade. There are two major types of exchanges which includes centralized and decentralized exchange.

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Centralize exchange as the name implies has a central authority which controls it data and is operated by a company whereas, decentralized exchange [DEX] operates without any central authority which controls people's data and funds. Users have full control of their data and fund.

There are different types of wallets with its own features. These wallets includes;

• Hardware wallets: These are wallets designed which operates as physical devices to store your private keys offline against online threats

• Software wallets**: are application programs that can be installed on your own personal device and operated manuallly. These wallets are categorized into desktop wallets, mobile wallet and web wallet of which I won't go into details.

• Paper wallet: This may sound absurd to you but it actually involves printing on paper your public and private keys. It's highly secured but can be vulnerable physically. I can remember those paper wallets we would make in our childhood and then use it to put the money given to us by our parents.

• Brain wallet*: These involve wallets tgst generate private keys from the passphrase you create after account creation. It's kind of secure if the passphrase isn't guessable or weak.

• Mobile wallets: These are wallets installed on our Mobile devices which gives us quick and convenient access to our cryptocurrencies or assets. Examples of this kind of wallet are;

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Everything is advantageous and disadvantageous. Crypto Wallets are of advantage in that;

• It provides full security and control over ones private keys, reducing the risk of unauthorized access or even possible hacking as some users are learning how.

• It provides an avenue where your private keys can be kept online as a cold storage form, protecting it from online threats.

• Crypto wallet this support decentralization which makes it possible for users to participate in P2P transactions without depending on intermediaries or central authorities

• Accessibility and management of one's funds without the need of intermediaries is an essential feature of cryto wallets. It offers full ownership without Central authorities or third parties.

• Some wallets doesn't require one's personal information for transactions ensuring anonymity.

In every advantageous things, there must be flaws or Disadvantages. These includes

• There's no way to recover lost funds if you lose your private keys, access to your wallet and your cryptocurrencies.

• Wallets aren't regulated often and some wallets require high level of technical knowledge to setup or even manage which may pose a challenge to new users.

• Software wallets, if not properly secured can be prone to phishing attacks or hacking.

• There are some wallets that requires transaction fees or gas fees when moving funds to another wallet. This can be very challenging and annoying .
  With these in mind, we need to be responsible when handling our Wallets just like we handle the management and security of funds in our commercial banks.

Many are still confused of which is an exchange and which is a wallet. The differences I'll highlight will provide distinctive features of his a wallet differs from an exchange.

This post is a summary of cryto wallets and exchanges. In my next post, I'll deliberate on how Crypto wallet and exchange works.

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Disclaimer: Any financial and crypto market information provided in this post was written for informational purposes only and does not constitute 100% investment advice. It's just basic knowledge every crypto trader or investor should have.