Crypto Academy Season 3 | Week 1| Intermediate course by @allbert - Homework Task1 ||A world of Wallets and Exchanges

Hello,
I salute all colleagues and professors in the Cryptoacademy.
I am opportune to learn again from professor @allbert, and I am going to answer my assignment bellow

Question

1. 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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Exchanges
In the context of cryptocurrencies and blockchain, exchanges are platforms, applications, or websites designed to facilitate the exchange of one crypto token for another or for fiat currency.
In the meanwhile, exchanges build a portfolio, which is also known as a wallet. Exchanges provide this wallet to each account so that crypto coins that are intended to be changed, as well as those that have already been changed, can be stored there and transferred elsewhere.

Wallets
In the context of cryptocurrency and blockchain, wallets are platforms or applications that serve the aim of safeguarding crypto assets, storing them discreetly for use in buying and selling transactions, or simply for savings.
Wallets are developed with superior technologies to ensure that stored assets are kept safe.

When crypto wallets are created by user, the user will be given encrypted private keys or seed phrases by the platform.
This keys are used to access and approve transactions on their wallets.
If users lost their seed phrases or the encrypted private keys, they have finally lost access to their account, because these key and phrases can not be recovered by the platform.

Differences between wallets and exchanges

There are several things that differentiates the two e.g Transactions fees, Security, Operations, Governance, However, they both can transfer assets from one to another, but at a different significant charging rates.

Crypto Exchange	Crypto Wallet
Exchanges are mainly built and designed for carrying out the operation of changing one cryto coin to another or to fiat currency.	Wallets are mainly built and designed to securely save crypto assets.
Exchanges follow protocols and accepts verification of users identify.	Wallets supports anonymous operation since they have no internet in users identify.
Exchanges charges low fees on transactions.	Wallets charges higher fees than exchange on transactions.
Exchanges create portfolio (Wallets) where by coin that needed to be changed or that has already changed are stored and transferred. This is one of the major function of Cryptocurrency Wallet.	Wallets created swapping function, which aid changing of one coin to another. This is one major function of an exchange platform. But Wallet gives this service at a significant cost.
Exchange account are created by users, and users get to set their own password which suits them.	Crypto Wallets are created by users, but users are given encrypted keys or seed phrases by the platform.
If users lost their login password to exchange account, it is recoverable by the platform.	If users lost their seed phrases or the encrypted private keys, they have finally lost access to their account, because these key and phrases can not be recovered by the platform.
Exchanges account can be easily attacked and hacked, which make it not very secured.	Wallets are designed with advanced technology which makes it very hard for attack or hacking to occur.

    exchange screenshot of identity verification

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Question

2a. In your own words, Why You think people should have more than one exchange account?.

The reason for having accounts in different Exchanges is that, sometimes a potential coin my be analyzed which you would like to buy at early stage and hold. When such happen, not every exchanges will have such coin listed on their exchange.
It will be of great benefits if we have more than one exchange account, we will be able to purchase such coin that have potential on other exchanges which already listed such coin and keep.

When Shiba Inu came, I bought some at gate.io and keep, it was after several weeks that Shiba Inu was later listed on Binance, and then, the price has multiplied.
Having more than one exchange account will give us upper hand to enjoy different opportunities.
Also, different exchanges have different services to offer e.g Staking, Farming, Leverage Trading, Margin Trading, some also have referral programs which we can also benefit from.

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Question

2b. Do you have an exchange account? and Why that specifically?

I have exchange accounts, because I have more than one. I am just getting to know more about cryptocurrency, and my mentor asked me to open more than one exchange account so that I use different opportunity from different exchanges.

Making money at price difference of a certain asset is always my aim.

There are always two sides in cryptocurrency exchanges market: There is a seller and also a buyer.
The buyer's goal is to simply acquire coins profitably, whereas the seller's goal is to sell his assets at a profitable rate.
The major motive for having my exchange account is to make money as a seller whenever I want to sell, or as a buyer, when I want to purchase an asset, to buy it at low cost.

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Question

3. What are better? Wallets or exchanges.?

Wallet is good and Exchanges is interesting too. Users intention and aim will judge which is better for their decisions.

• Security
  In terms of security, Wallet is leading in this aspect, as it is backed up by special numeric keys (Private keys or Seed phrases) which makes it more secured for savings.

• Anonymous Transactions
  Wallet creation does not involve your personal data verification, which makes it better in performing anonymous transactions

• Fees
  Exchanges charges very low fees on transactions compared to Wallet

• Account Recovery
  Password can be recovered if lost when you use an exchange, but once the Wallet Private keys or Seed phrases is lost, the wallet is lost too.

• When using an exchange, your exchange account operates like a bank: the account opened for you is not entirely yours. Wallet gives you full control over your accounts

If decision is left to me, I would pick Crypto Wallet over exchange, and my main reason is for the security purposes.

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Question

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

Atomic Wallet Process

• I Downloaded Atomic Wallet on my mobile phone, explored it after downloading

• I Selected create new wallet

• I wrote a password I can not forget. ( Yours can be your pet name, your school name or anything).

• I'll have to confirm that I remember my password. I Wrote the very same password again

• My new wallet creation process is loading

• I Copied my wallet seed phrases on my clipboard, pasted it elsewhere in a place of my choice. Wrote it down. (Do not miss it.)
• I selected start using Atomic.

• Atomic wallet is ready for use.

Poloniex Exchange Process

• Download Poloniex application on playstore with this [link]
  (https://play.google.com/store/apps/details?id=com.plunien.poloniex)
• I explored the application after downloading

• I Selected Sign Up: That is to create a new account

• I Filled my details, set a password that I wiil not forget, confirm that I remember the password (Your password must be 8 character long)

• I Marked the verification buttons

• After all the necessary, I selected Sign Up.

• A notification mail was sent to me, I went to my mail and verify my email

• After Email verification, I selected Log In

• I Fill my log in details, click on the verification button, selected Log In afterwards

• Now, I can begin trading with my exchange account

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Conclusion

Exchange and Wallet are two different concepts, there services seems similar but are entirely different.
From this article, I hope I have been able to express how they both work, and how understanding them can give us chance to opportunities which might give us good profit.
Thanks.