What’s the difference between a cryptocurrency exchange and a cryptocurrency wallet? A guide to understanding the two important services for every cryptocurrency user.
A cryptocurrency exchange is a platform that enables customers to trade cryptocurrencies or digital currencies for other assets, such as conventional fiat money or other digital currencies. It is possible to trade either from peer-to-peer (P2P) or via an intermediary. The service acts as a platform that matches buyers with sellers, much like a traditional stock exchange would do.
Anyone who wants to actively trade in cryptocurrencies should use such a service. You can buy Bitcoin and Altcoins on exchanges. Some exchanges also offer you the possibility to sell your coins (withdraw them into fiat currency).
The most popular exchanges are Binance, Bitfinex, Bittrex, Kraken, HitBTC, Poloniex, Coinbase and Bitstamp.
A cryptocurrency wallet is a software program that stores private and public keys and interacts with various blockchain to enable users to send and receive digital currency and monitor their balance. If you want to use Bitcoin or any other crypto currency, you will need to have a digital wallet.
In order to conduct transactions on the blockchain you need to have an address (public key). In order for people to
If you are new to the world of cryptocurrencies, then you may be wondering what a cryptocurrency wallet and cryptocurrency exchange is. Also, you may be wondering what the difference between a cryptocurrency exchange and a cryptocurrency wallet is.
You’re in luck, because this guide will explain exactly what these two services are and how they differ from each other. Also, we will go over why you need both even if you only plan on using one or the other.
Before we dive in, let’s begin by defining what a cryptocurrency exchange and a cryptocurrency wallet is:
Cryptocurrency Exchange: A platform that allows users to buy and sell cryptocurrencies for other assets, such as conventional fiat money or other digital currencies.
Cryptocurrency Wallet: A software program that stores private and public keys and interacts with various blockchain to enable users to send and receive digital currency and monitor their balance. If you want to use Bitcoin or any other cryptocurrency, you will need to have a digital wallet.
A cryptocurrency exchange is a service for changing digital currencies, such as Bitcoin, Ethereum, and more, to fiat (paper) currencies or for other digital currencies. A cryptocurrency wallet is a medium to store your digital currency.
If you want to buy, sell, or trade cryptocurrencies, then you need a cryptocurrency exchange. While the concepts of wallets and exchanges are often intertwined and used interchangeably, the two services actually serve very different purposes.
In this guide, we’ll explain the difference between cryptocurrency exchanges and cryptocurrency wallets.
A cryptocurrency wallet is a software program designed to store your public and private keys, send and receive digital currencies, monitor their balance, and interact with various blockchains. Your assets are protected from hackers and thieves.
The best way to think of a cryptocurrency wallet is as a bank account exclusively for digital currency. You can use it to deposit funds, withdraw cash, pay for goods or save your money. The only difference is that it’s not controlled by a central authority like a bank but by private keys (basically long passwords) that only you know.
If you’re new to the cryptocurrency scene, it’s likely that you might get confused by two terms: cryptocurrency exchange and cryptocurrency wallet. It’s easy to confuse these two as they both deal with cryptocurrencies. However, it’s important to understand the differences between them.
A cryptocurrency wallet is just like a normal wallet on your person—you use it to carry a small amount of cash for ease of access. You wouldn’t walk around with all your money in your pocket, would you? The same goes for a crypto wallet. A crypto wallet is where you keep all your cryptocurrencies safe, away from hackers and malware which can steal them from exchanges. Generally speaking, crypto wallets have public keys (used for receiving funds) and private keys (used for sending funds). These are similar to bank account numbers and PIN numbers respectively.
On the other hand, a cryptocurrency exchange is more like a stock market for cryptocurrencies. This is where buyers and sellers come together and trade cryptocurrencies for fiat currencies or other cryptocurrencies. For example, if I want to trade my Bitcoin for Ethereum, then I can do so in an exchange by placing an order that says I will sell my Bitcoin at a certain price and buy Ethereum at another price. The difference
Cryptocurrency exchanges are the most popular method of exchanging BTC & other currencies into Fiat at this time. You can also exchange directly from one cryptocurrency to another.
There are two main types of exchanges that we will discuss in this guide. Those that allow you to trade fiat currency for cryptocurrency, and those that do not.
These exchanges allow the direct conversion of US Dollars, Euros, and most government-backed currencies into cryptocurrency. The most popular Fiat exchange is Coinbase. Coinbase allows users to buy, sell and store cryptocurrency all on one user-friendly platform.
While Coinbase is beginner focused, the process of setting up an account, adding funds, and purchasing currencies can still be less than straightforward. This guide will teach you every you need to know about Coinbase. We suggest using Coinbase to begin then transferring those funds to Binance or Kucoin where you will pay less in fees for trading.
These do not deal with traditional payment methods like credit cards and banks. Instead they allow the transfer of Cryptocurrencies between users. These are often much easier to use than the regular Fiat Exchanges, but you will often pay higher fees for the privilege. The larger the Exchange means more liquidity and lower fees usually however there
A cryptocurrency wallet is a software program that stores the private and public keys that connect you to the blockchain where your cryptocurrency exists.
The wallet allows you to receive cryptocurrencies, store them, and then send them to others. You need a wallet to receive cryptocurrencies like Bitcoin or Ethereum from others.
A cryptocurrency exchange is an online platform where you can buy, sell, or exchange cryptocurrencies for other digital currency or traditional currency like US dollars or Euro. For those that want to trade professionally and have access to fancy trading tools, you will likely need to use an exchange that requires you to verify your ID and open an account.
Most people use decentralized exchanges because they don’t require any information, and you simply transfer your coins directly between wallets. However, these exchanges often suffer from lower liquidity. Exchanges like Coinbase and Binance are centralized exchanges that do require an ID but allow you access to higher liquidity order books.