Crypto Wallet vs Exchange: Key Differences
Cryptocurrency wallets and exchanges are essentially the two main options for crypto holders to store their funds. If it wasn’t for these tools, the industry would’ve grown to the scale it represents now.
The thing is, even if the same company operates some wallets and exchanges, it doesn’t make them identical. There is a certain confusion about their difference, but it doesn’t mean crypto wallets and exchanges cannot work together. In this guide, we will discuss how these main crypto storage tools differ and what is a better option for different use cases.
What is a crypto wallet?
While a cryptocurrency exchange helps you buy or sell crypto, a crypto wallet is what you use to send the cryptocurrency to when it’s being traded.
In other words, a crypto wallet helps you to ensure the safety for your crypto by providing storage space. It might be software or in the form of a hard drive, but what’s important is that no matter the form, the wallet's main purpose is to store your pair of keys.
A public key is your identification and does the transaction encryption, while your private key is responsible for decrypting your sensitive data when you carry out blockchain transactions. Simply put, your public key is something that other users see. The private key, in turn, signs blockchain transactions and must be well hidden. You can consider a crypto wallet your personal guard who will take care of your keys for you.
What are crypto exchange trading platforms?
First, we’ve got to understand how crypto exchanges work. This is a digital platform where people can trade their cryptocurrency or some other digital assets. On cryptocurrency exchange, you can review prices of Bitcoin, Ethereum, Cardano and other crypto. Every exchange has its own range of supported cryptocurrencies and works with 24/7 accessibility, where you can convert or buy crypto at any time.
Exchanges charge fees for every transaction carried out on the platform. Every time you buy or sell something, you pay a small percentage of your whole transaction amount.
There three main exchanges types:
Trading platforms. Such websites help buyers and sellers reach each other and take fees from each transaction.
If you’re looking for a secure option to accept crypto, that is to say sell your goods while buying crypto from your customers, cryptocurrency payment gateway is a perfect option.
Let’s take Plisio, for example. This platform provides you with an API you can integrate to your online store and then start accepting 18+ available cryptocurrencies, which go right to your Plisio wallet. Such payment gateways do not only provide you with an option to accept crypto, but also provide you with a secure wallet you can use to store your other crypto assets freely. All of that for a modest fee of 0.5%.
Brokers. Such platforms help brokers sell cryptocurrencies by the price set by them.
Direct trading platforms. Such websites provide direct P2P trading. There are no set prices for assets; each seller has their own exchange rate.
Crypto exchange vs wallet
The main difference between a crypto wallet and exchange is that exchanges only provide you with cryptocurrency trading options; they don’t provide the necessary storage.
Let’s summarize the main features of a crypto wallet and exchange.
Exchanges allow you to:
- Trade crypto;
- Convert cryptocurrency to fiat and vice versa;
- Send crypto to a wallet.
Crypto wallets allow you to:
- Safely store your crypto;
- Access crypto at any time;
- Secure your assets.
Exchanges help you sell or buy cryptocurrency fast and efficiently, while storing cryptocurrency on the exchange wallet might not be a good idea in the long term. When you store your funds there, there is no guarantee of what will happen to your crypto as your exchange account may get blocked or the exchange will get hacked, what’s worse.
Therefore, it’s advisable to transfer your funds from an exchange to your personal wallet, where your funds will be safe. It is you, the user, who must be responsible for security and management of your assets. This is the key difference between a wallet and exchange, and it’s important for you as a user to understand that.
It can be said that crypto exchanges are the software close to a hot wallet, as they allow you to trade and store crypto in online accounts. For that reason, exchanges cannot be considered digital wallets, as you can only store your keys there, not crypto per se.
Crypto Wallet Advantages
The best feature crypto wallets can offer is the total control over your private keys, both now and in the future. The more state regulations crypto exchanges have to face, crypto wallets remain adamant means of storing your crypto assets safely, with no restricted access to your funds.
If you own an offline wallet, which means you store your crypto on some sort of a USB device, key theft perspective is not something you need to fear. You still have to keep in mind that total control means more responsibility on your part. Remember your password and a set phrase, otherwise your crypto holdings will be gone forever.
A crypto wallet is no more than a set of public and private keys granting you ultimate access to your crypto assets. Thus, if you’re looking for security and total control over your holdings, a crypto wallet is just what you need.
If you’re a short-term trader who likes to play on the crypto unstable exchange rates by selling or buying all the time, a cryptocurrency exchange will suffice for your needs just fine.
In that case, however, you will have to take additional security steps to protect your private key.
If you’re kind of new to crypto and looking to start investing or accepting crypto, you can give the Plisio platform a try. Plisio offers not only a safe storage option – the Plisio crypto wallet – but also an opportunity to accept 18+ available cryptocurrencies at your online store or any other kind of business. You can set up crypto payments in no time and open for yourself the whole world of new opportunities that come with an expanded client base. It is time you dove into the new financial realm, where you don’t have to pay heavy bank fees or wait for weeks on your transactions. Get started now!
Please note that Plisio also offers you:
- Zen Cart
4 libraries for the most popular programming languages
19 cryptocurrencies and 12 blockchains
- Bitcoin (BTC)
- Ethereum (ETH)
- Ethereum Classic (ETC)
- Tron (TRX)
- Litecoin (LTC)
- Dash (DASH)
- DogeCoin (DOGE)
- Zcash (ZEC)
- Bitcoin Cash (BCH)
- Tether (USDT) ERC20 and TRX20 and BEP-20
- Shiba INU (SHIB) ERC-20
- BitTorrent (BTT) TRC-20
- Binance Coin(BNB) BEP-20
- Binance USD (BUSD) BEP-20
- USD Coin (USDC) ERC-20
- TrueUSD (TUSD) ERC-20
- Monero (XMR)
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