Some Clear Differences Between Crypto Wallets and Exchanges in the Crypto World

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.