Hello. Everyone. I am Kyusong Moon, the IOS developer at GBT Protocol.
The topic of today’s posting is the comparison between private wallet and exchange wallet.
Before we check the comparisons, let’s have a look at what is cryptocurrency wallet.
Crypto wallet is the software program to storage the coins safely. Even though the definition of the crypto wallet refers to storage coins, It is more likely meaning ‘communication application’.
Simply, we can consider it as a banking application.
Banking applications demonstrate the results of communication with banks, it does not store real money on the app.
Likewise banking app, crypto wallets also demonstrate the results of communications with blockchain, it does not store real coins on the app.
There are two categories of crypto wallets, Private Wallet and Exchange Wallet.
The private wallets are available on devices like mobile/web/hardware.
Since the users have the right to their own private key, the private wallet is relatively safer than the exchange wallet, when they keep their private keys safely.
On the other hand, Exchange wallets are made by each exchange like Bithumb, Upbit, Coinone for trading purposes within the exchanges.
Unlike private wallets, the exchanges have a right of users’ private keys.
Then, what is the commons and differences between private and exchange?
First of all, the common feature is that the functions of both are the same.
Both of them connect to blockchains to show the current amount of coins, also they are available to transfer to others’ wallets.
Then what are the differences?
The purposes of wallets are different.
The private wallet is focused on the storage of cryptocurrencies more safely and for the long-term.
But the Exchange wallet is focused on the convenience of tradings between users within one exchange.
So, Let’s learn about how exchanges manage their wallets for the simplicity of trading via Etherscan(the website that shows the state of tradings between Ethereum and ERC 20 tokens).
I send 0.4ETH from Methamask to Upbit.
[Private wallet -> Exchange deposit wallet]
What we need to know here is the incoming address on your Upbit account.
When you get the incoming address, you can send 04.ETH from Methamask to Upbit.
From is my private wallet address, and To is my Upbit wallet’s deposit address.
Fortunately, the transaction is successfully done! Then, my 0.4 ETH should be in my Upbit deposit wallet, right?
When you check your personal upbeat’s deposit wallet
After 20 mins, 0.4ETH is transferred from my deposit wallet to an address 0x5e0322….
I did not even withdraw myself.
So I check whose possess the address 0x5e0322…, and it belongs to Upbit’s ledger of Ethereum.
When many users send Ethereum to their own incoming address on their Upbit accounts, then all Ethereum they sent gather at the Upbit’s ledger of Ethereum after a certain amount of time.
When you think about the selling and buying Ethereum at exchanges, we can check the result of trades on the exchange wallet instantly.
Even, it takes a few minutes to transfer Ethereum on Ethereum blockchain in the real blockchain world.
Actually, it happens because the results that we can see on the exchange wallet are the changes in numbers based on the exchange’s database. It is not the simultaneous transactions between existed private wallets.
When a Seller(A) trades 1 ETH as $150 to a Buyer(B), it does not mean 1 ETH is literally moved from A’s wallet to B’s wallet. It rather the record of transactions on the exchanges’ database and concludes the trade instantly.
Because of the system that all transactions are managed by the exchange’s ledger, the speed of transactions is guaranteed.
As the logic Yin and Yang, if there are advantages. There are some disadvantages, like moral hazard, or fabrication in a computational system.
Blockchain hackings that you heard from News mainly happen at the exchanges.
The solution to these scandals could be to store your coins in private wallets.
We, GBT Protocol soon release Planet wallet which is a private wallet on the 24th of September.
If you would love to avoid those risks and manage your asset safely,
Then please stay tuned for our release of Planet Wallet.
So I finish today’s posting,
I hope you understand the concept of two different wallets.
Next time, I will explain the common mistakes of deposit!
Thank you for your time to read my post, then see u very soon!
Our first product, PLANET WALLET will be released on the 24th, September.
#GBT_Protocol #GBT #Planetwallet #cryptowallet #bitcoinwallet #etherwallet #privatewallet #exchangewallet #blockchainworld