Differences Between a Crypto Wallet and an Exchange
Crypto wallets offer a digital solution for users to store and manage their crypto holdings. Besides allowing users to receive, send and spend crypto, crypto wallets lets you store your private keys securely.
Similar to a broker, crypto exchanges act as intermediaries between buyers and sellers. This means exchanges act as a marketplace where users sell, buy and trade digital currencies. Additionally, exchanges support the trading of major digital assets like Ether, and Bitcoin among many others.
However, most exchanges allow users to buy and sell digital currencies through their custodial wallets. As such, exchanges store digital assets for you on their custodial wallets. In that regard, you entrust them to store, secure, and hold your digital assets.
While crypto exchanges command the largest number of users, they lack adequate safety measures associated with crypto wallets. Unlike exchanges, crypto wallet users do not have to seek permission from a third party to execute transactions.
Therefore if you are new to crypto and wondering how you should store and secure your digital assets, here are the distinctive differences between a crypto wallet and an exchange.
What is a Crypto Exchange
A crypto exchange is an online marketplace that lets users sell, buy and trade digital currencies. Today there are over 500 exchanges available in the crypto space. Most of these exchanges come with different features that suit both new and experienced crypto users.
If you want to invest in crypto, all you need is to create an account. Once you create an account, you can access and trade a wide range of digital assets available on the platform. Besides lending, some crypto exchanges not only offer educational content but have also restricted operations to specific geographic locations.
Depending on your needs, exchanges come with an array of options that you can leverage to trade and secure your digital assets. Compared to crypto wallets, exchanges come with security lapses that may throw your crypto holdings at risk of being stolen.
What is a Crypto Wallet
Crypto wallets come in different formats based on their work. For example, you can either go for either cold or hot wallets. A software-based wallet like Defix is more convenient and accessible. In addition to making digital currencies easily accessible, software wallets let users access their digital assets instantly.
Contrary to exchanges, software wallets give users total control over their private keys hence their funds. Software wallets come in form of a program that you can install on your device and manage your crypto on the go.
The good news about a software wallet is that it not only makes it easy for you to use your digital assets but also offers better security. This is contrary to exchanges that deny you the opportunity to have total control over your digital assets.
The good news about software crypto is that you simply need to install it on your device to get started. This will enable you to secure your private keys and eliminate the risk of losing your crypto.
Conclusion
If you are looking for a platform that can make it easy for you to manage your digital assets then a software wallet is a perfect option. With a software wallet, you will not only have total control over your digital assets but also secure your crypto.
Before you invest in crypto, it is important to first consider looking for a secure and convenient one. This not only saves you from the danger of losing your investment but also executing fast crypto transactions.
