Crypto trading takes place only on crypto exchanges. You can also store your cryptocurrency on the exchange. At the same time, a wallet is a medium where you can keep your investments, which you will not use very actively, in a more secure way.
What is the difference between crypto wallet and crypto exchange? Both these tools are important for trading cryptocurrencies. But the work of both of them is very different from each other. Both these are important but different parts of the crypto ecosystem. In this article, we are telling you what are these two things and what is the difference between them. And you will also learn why you need a crypto exchange and why you need a crypto wallet in your crypto journey.
Cryptocurrencies like bitcoin and ether are generated through mining. Mining means to generate new digital coins. And this work is done by solving complex cryptographic equations ie equations in very excellent computers. After solving the equation, the user gets coins as a reward, from here it is either sold directly to a buyer or it is traded on the exchange. But an investor simply buys and sells the already existing coins and tokens.
Crypto trading takes place only on crypto exchanges. You can also store your cryptocurrency on the exchange. At the same time, a wallet is a medium where you can keep your investments, which you will not use very actively, in a more secure way. It should also be noted that most of the major exchanges run their own wallet.
What is a cryptocurrency exchange?
A crypto exchange is a platform where you can buy and sell other cryptocurrencies and crypto tokens, including bitcoin, ether and dodgecoin, with more stable prices and more security. A cryptocurrency exchange works like a brokerage firm, that is, it is a medium between the buyer and the seller. According to an exchange, investors can deposit their money on it through any mode of payment like direct benefit transfer, card transaction, UPI, etc., which can be used to buy crypto coins or tokens from there.
On the exchange, crypto is used to buy and sell any other asset (ie either another crypto coin or token, or flat currency ie rupee, dollar, etc.). In addition, you can also convert your crypto coins or tokens into flat currency on the exchange.
If you want to buy cryptocoin without using an exchange, you will need to find a seller. Then both of you will have to negotiate the exchange rate, then buy the coin and send it to your crypto wallet.
What is a crypto wallet?
A crypto wallet is basically a software program in which you store crypto coins. Let's say you bought bitcoin, since it's an online currency, you can't touch it with your hand, then you also need an online medium to store it. This is the job of a crypto wallet. Crypto wallets contain private keys, which are used to make transactions. These keys are a kind of secret code that you have to enter in order to spend your coins.
These private keys are very important, because if a hacker hacks your keys through malware in your phone, then he can steal all your coins. On the other hand, if you lose your keys, you will lose access to your wallet forever. There are three types of wallets – hot, cold and paper wallets.
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