Crypto Academy / Season 3 / Week 1 - Homework Post for @allbert - A World Of Wallets And Exchanges

Good day everyone. Thanks to @allbert for such a wonderful lecture on A World Of Wallets And Exchanges. I will be doing the homework from the lecture, so sit back and look for somewhere quite quiet and comfortable as you read through this amazing article I created just for you(😉). Let's get started!!!

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When starting my cryptocurrency journey 2018, I was a bit confused with these two terms, Wallets and Exchanges. But after some while, I got to understand the difference and currently I have 3 wallets and 4 Exchanges account which are Binance, Huobi, Probit and CoinEx. I have 3 wallets and 4 Exchange accounts for different reasons which will help you understand these two unique terms, as you read through the article. Without wasting any further time, let's begin the task.

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Explain differences between wallets and exchanges as well as mention which operations should be performed in an Exchange and which operations should be performed in a wallet (in terms of fees).

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It is quite interesting when you know the differences between Wallets and Exchanges, but a funny part of the differences, is that, we have a wallet in an exchange.

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• Wallets are specially created and designed to store our cryptocurrencies. With the introduction of Defi, some people are starting to confuse Wallets for Decentralized Exchanges. There is nothing different from the definition of wallet which I stated above, Decentralized Exchanges just ask for your permission to link your wallet to their exchange. Your wallet with your cryptocurrencies are still under your full control. Whereas Exchanges are platform where users can trade, stake and store their cryptocurrencies. You don't have full control over your wallet(where your tokens are stored within exchange), as you could wake up one day and noticed that you can not withdraw a coin because the server is under maintenance and you might not know for how long.

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• Some people may say we can exchange a token for another token on our Wallets, meaning that, you can trade on your wallets. That's totally false, you can only swap a token for another, on Wallets. Now, what's the difference between trading and swapping. For swapping, you just exchange a coin for another. For instance, you want to swap some of your Hive tokens for some Doge tokens, you will see something like 1 Hive for 3 Doge, 2 Hive for 6 Doge, as you increase or decrease your Hive, you only will be able to see the number of Doge, your Hive can purchase, hence, you can't set your own price. Whereas trading, you can set your own price that you will be willing to buy or sell. You can set your price over or below the current market value and get your profit as soon as the price reaches the value you set. There's more flexibility when it comes to trading than swapping. And that's a major difference between Wallet and Exchanges, because in Exchanges you can trade whereas in Wallets you swap.

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• The fees when you swap in Wallets are ridiculously expensive. You can pay a fee of $50 for a transaction of $30, it is that expensive. Whereas the fees when you trade in Exchanges are very cheap, you most times spend about 0.2% for your transaction fees and I think that's the highest cost for almost all exchanges across the world. For the example stated above, you should be spending 0.2% of $30 for that transaction, which will be $0.06. So, you can see how very cheap trading on Exchanges can be with regards to swapping on Wallets.

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• There are two types of Wallets which are the Cold Wallet And Hot Wallet. Majority of us, make use of Hot wallets, which are wallets where your tokens are saved online, examples include, Trust Wallet, Metamask, etc. While Cold Wallets are the safest wallets, where your tokens are saved offline, examples include, Trezor, Ledger Nano, etc. On the other hand, exchanges are of two types, which are, the Centralized exchanges and Decentralized exchanges. The centralized exchange, users makes use of the wallet of the platform which is not totally in their control. While decentralized exchanges, users make use of their personal Wallets, which is totally in their control.

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• Wallets are more safer to use when you are hodling or storing your cryptocurrencies because you are in total control over your funds in your wallet. Whereas, exchanges are not so safe. The owner of the exchange platform can wake up one morning and run away with your money. It recently happened in South Africa, when two brothers stole over $3.6 Billion from users of their exchange platform. Wallets are mainly for storing your assets because of it's security level while exchanges are mainly for trading and less safe for storing assets.

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• Lastly, there is no minimum withdrawal on wallets. You can withdraw any amount of your tokens you wish to withdraw. While there is minimum withdrawal on exchange platforms. Different coins have their different minimum withdrawal. I wanted to withdraw some Hunts from Probit exchange for an Airdrop, I couldn't because the minimum withdrawal was 1,000 Hunts which is over $1500, so I missed out on the lucrative airdrop.

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One Of My Wallets

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Operations That Should Be Performed In An Exchange And Wallet(In Terms Of Fees)

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As I stated in one of the differences above, wallets makes use of swap when exchanging one token for another, and the fees for swapping is very very expensive. On the other hand, Exchanges makes use of trading when exchanging one token for another and the fees for trading is very cheap.

In summary, operations that are carried out in a Wallet includes storing of assets, swapping of assets and Transfers of assets(receiving and sending of assets). While for exchanges, operation includes, storing of assets(less security compared to wallets), trading of assets, staking of assets(some exchanges do staking of assets) and transfers of assets.

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Why You think people should have more than one exchange account?.

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I believe the first reason why people should have multiple exchange accounts, is for the safety of their hard earned funds. You should not be trading with all of your money in one exchange account, it is very risky. There have been cases of hacks on major exchange platforms and it won't be wise to entrust all your funds in a platform where you have no complete control over your funds. Like the case that happened in South Africa, on an exchange platform called Africrypt. The incidence is regarded as the biggest crypto scam ever, which amounted to $3.6 billion lost from users using the platform. Want to read more about the incidence, click here. So, now you see why it is important to spread your assets across different exchanges, because it will totally impossible for two major exchange platforms to be hacked at the same time. Play safe, have multiple accounts.

Another good reason why people should have multiple accounts, is because different exchange platforms performs different giveaways, airdrop, contests and of recent staking activities. So, it is good not to miss out any lucrative event on different exchanges. Some days back, binance just started an amazing staking event on ADA token with an amazing APY of 17.7%. Click here for more information on that.

The final reason why I feel people should have multiple exchange accounts, is because, not all coins are listed in one exchange platform. There are some coins that are listed in one exchange platform and not listed in another. So, it is good to have more choice when it comes to trading with different coins, hence, the need for multiple exchange accounts.

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My Binance Account

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Do you have an exchange account? and Why that specifically?

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I have 4 different exchange accounts because of events and trading of some unique coins which are not so popular.

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• Binance: Binance is my most used exchange because I feel it very secured because it is well known and most used exchange platform in Nigeria currently. So, I trade mainly on Binance and partake in many of their different events.

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• Huobi: I created this account because there are some times when I will not be able to deposit STEEM or some other tokens on Binance, I make use of Huobi exchange platform to deposit and trade during such period.

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• Probit: I created this account because it listed both Hunts and OneUp tokens and I really wanted to acquire these tokens and most exchange platforms didn't list these coins.

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• CoinEx: This is the last account I recently created. I created this account because it listed BAN tokens which is not listed in most exchange platforms and I notice the coin is a coin worth buying now for the future. So, I created this account to accumulate the coin for the future.

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Which is better? Wallets or exchanges?

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Better? I really don't think there's a need to choose which is better, because both serve different supposes. You use wallets to store and hold your assets while you use exchanges to mainly trade and stake your assets. I personally feel that both are good and necessary for all who are interested in cryptocurrencies. For instance, you can't have access to a decentralized exchange without having a wallet. So, both are completely necessary for every crypto person. But if I were asked mandatorily to choose between Wallets and Exchanges, I would go with Wallets, because I can store my assets and hold for some long period without been scared of losing my assets. But both are good and completely necessary to have.

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Create an account in a wallet and in an exchange of your choice and show screenshots of the process.

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First we are going to create a wallet and I will creating a metamask wallet. Follow my simple steps and you will create your own metamask wallet quite easily too. First thing first you have to get a Metamask extension, by cliking here. As soon as you arrive on the site, click on Add Extension which will be located at the top right corner of the screen. It will take a while and it will be added to your chrome extensions. To know if it has successful been added to your extension, instead of it showing Add Extension, it will be showing Remove from Chrome. And it will look just like this

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Click on the Metamask extension and then click on Create Account.

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And boom!!! You have successfully created a new Wallet.

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You have to back up your wallet, in case, your system gets damaged or stolen, so that, you can still be able to recover your wallet and your assets in it. You are meant to save your back up very safely because without it, you won't be able to have access to your account. Your back up can be either seed phrase or private keys. For this instance, we would be getting our private keys. You have to click on the 3 dotted toggle on the top right corner of your screen and then click on Account details.

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After clicking on Account details, you should then click on Export Private Keys.

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After clicking Export Private Keys, you will see your Private key. Copy and put it safe, because without it, your funds will be lost if your current system gets damaged or spoilt. So, keep your private key safe.

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And there you have it, you have successfully created a Metamask wallet and backed it up successfully.

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Exchange Account

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I have 4 exchange accounts, for this article I will make it 5 and I will be showing you all, how to get a MEXC Exchange account. Follow me as I work you through the process.

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First, you have to click this link and then click on Sign Up which is at the top right corner of your screen.

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After you have clicked on Sign up, you will have to fill a form containing your gmail, password and verify your gmail. After filling the form and verifying your gmail, click on Sign Up.

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After clicking on sign up, you will then be asked to Log In, by inputting your gmail and password. After you have done that, click on Log In.

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After you have clicked on Log In, you will be asked to verify your account by going to your Gmail to get the code that have been sent to your mail to verify your account. As soon as you verify it. You have created an exchange account.

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Congrats, you have successfully created your MEXC Exchange account.

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Conclusion

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Wallets and Exchanges are very necessary for anyone entering the crypto world. They both serve their purposes in a unique way. With decentralized exchanges gaining more presence in the crypto world, you must have both a wallet and an exchange account. Wallets are for storing/holding assets while exchanges are for trading and staking of assets, both have very necessary features for every crypto person. So do well to have a wallet and exchange account.

For this homework, I discussed about the differences between wallets and exchanges and the operations they both perform. I also discussed why I think people should have more than one exchange account, as well as telling the reason why I have 4 different exchange accounts. And lastly, I showed how to create a wallet and exchange account. I hope I have done justice to the task.

Special Thanks to you, @allbert, for organizing this amazing class and giving this nice assignment, as it has helped me increase my knowledge on wallets and exchanges.