Especially in the case of beginners in the world of cryptocurrencies, some terms tend to be confused, so it is good to clarify that there are very marked differences and that although it is true that there are exchanges that also offer the service of wallet, it is not the most We recommend using it to store our cryptocurrencies.
What is a wallet?
Wallet or wallet is the digital place used to store your cryptocurrencies, something similar to what is done with bank accounts. In the previous article titled What is a wallet? Know how to save your cryptocurrencies, we have expanded this concept a bit more and we also explain the different types of wallets that exist, such as cold wallets and hot wallets, depending on whether or not they have an Internet connection.
The security of a wallet does not have as much to do with the connection or not to the internet, that is to say, there is no difference between using a cold wallet and a hot wallet, since both types of wallets are equal in security, however, it is good clarify that however secure a wallet is, if the owner shares its keys (both public and private) is already putting the security of your account at risk, likewise, if you leave it in a place that anyone can easily access It is also making her vulnerable.
What is an Exchange?
An Exchange or exchange, is a platform (usually an authorized website) where you can exchange your fiat money for cryptocurrency and vice versa paying the prices established in the market at the time and always seeking to obtain the highest possible profitability by following the principle of free offer and demand.
This is because in an Exchange can also participate people who sell their currencies and others who buy them, that is, it is not just an entity that does, but a platform that facilitates this exchange and provides security and confidence to its users to ensure that all transactions that occur in it come to fruition.
What is the difference between a wallet and an Exchange?
Basically the main difference is very simple and part of the utility of each of them: a wallet is to keep and have controlled the cryptocurrencies that belong to us and an Exchange is to make financial transactions with them, that is, to exchange them either for fiat money or other cryptocurrency.
Another fundamental difference lies in the fact of the types of wallets that exist, while you can have your cryptocurrencies safe without the need of an internet connection, in the case of exchanges this is not possible because to be able to carry out any transactions off line, that is, you will always need an internet connection to be able to use an Exchange.
Are there exchanges that have their wallets?
Yes, of course there are, just as there are wallets that have nothing to do with an Exchange, there are companies or online exchange houses that also offer the wallet service, which benefits its customers especially because of the issue of fees. that they charge when carrying out operations.
For example, if we have our crypto currencies in a wallet A and we want to make a transaction with them, we must necessarily transfer them to an Exchange B and this will generate some fees that will be charged as a commission for the transaction (usually very high), but that Exchange B also had a wallet B then any transaction we make between them will have much lower rates and commissions will be lower.
What do you think about this topic? Did you know the differences between a wallet and an exchange?
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