What is a crypto exchange vs wallet?

A cryptocurrency wallet refers to a program that allows an investor to store all of their cryptocurrencies. On the other hand, a cryptocurrency exchange refers to a website or service where you can sell or buy digital currency or convert fiat currency into digital currency. A Bitcoin wallet is basically a software program in which you store Bitcoin. An exchange allows you to convert “real money like US dollars” into Bitcoin.

Exchanges also provide a wallet, but you don't necessarily have full control of that wallet. A cryptocurrency exchange allows you to trade cryptocurrencies. Your crypto wallet is what you'll use when you send and receive those coins through the exchange. It's important to note here that keeping cryptocurrencies in an exchange wallet is not the same as having them in your personal wallet.

Exchange wallets are escrow accounts provided by the exchange. The user of this type of wallet is not the holder of the private key of the cryptocurrency found in this wallet. The cryptocurrency exchange and the wallet are two of the most prominent things that appear in the crypto industry, but people can confuse these two points with each other. When you make a purchase, the cryptocurrency you purchased is automatically stored in your wallet hosted on the exchange, which is usually escrow, which means that the exchange has control of your private keys.

By keeping your keys for you, cryptocurrency exchanges give you easier access to your funds through a more familiar username and password setting, allowing you to trade seamlessly on the exchange. A cryptocurrency exchange is a platform that allows you to buy and sell your Bitcoin, Dogecoin, Ether or other cryptocurrencies tokens at fixed prices and securely. When cryptocurrency was first introduced, sending cryptocurrency was a manual task that required entering long keys. The exchange is a website or application that allows you to convert your fiat currency (such as USD or INR) into cryptocurrency.

As mentioned above, it is not advisable to keep large amounts of cryptocurrencies in any hot wallet, especially in an exchange account. If exchanges didn't exist and you wanted to buy Bitcoin with US dollars, you'd have to find someone with Bitcoin, agree on an exchange rate, pay them, and then have them send that Bitcoin to your wallet. Cryptocurrency wallets and exchanges are two important tools that allow this revolutionary digital industry to function properly. Since most exchange wallets are popular and escrow, it's vital that you trust the exchange you use to store your cryptocurrencies.

While there are other ways to buy cryptocurrencies, many people purchase them on cryptocurrency exchanges. On the other hand, when your digital funds are held in an exchange account, sometimes called an exchange wallet, you hand over part of that general control to the platform. For example, you could lose your Bitcoin if the exchange was hacked, if a dishonest employee stole your private keys, or if the exchange's owners took the money and fled. If you're new to the world of cryptocurrencies and are still learning how to invest in Bitcoin and other currencies, it's best to keep part of your funds in an exchange wallet.

An exchange is a platform that allows people to buy and sell cryptocurrencies and other digital assets.