I am writing this post in response to the assignment task given by the professor @allbert , I really enjoyed, understood very clearly and really appreciate and thankful to you for your work for the steemit community .
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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).
Wallet: Wallet is a program or software which allows us to store our fund securely in digital form . There are different kind of wallets we know like digital wallets , physical wallets and crypto currency wallets. Wallets are used to store the value of our money and for payments or transactions purpose. E-wallets or digital wallets are Paypal,Skrill,advcash etc. Physical wallets are Ledger and Nano hardware crypto wallets . Crypto Wallets are Trust wallet, Atomic Wallet,Blockchain Wallet, Coinbase Wallet etc. Here we will discuss about cryptocurrency wallets .
Crypto currency wallet was developed to store our digital assets or cryptocurrencies like Bitcoin, Ethreum, Tron, Steem etc and there are lots of wallets which also support non-fungible token which we know as NFT. We can send , receive and store our cryptocurrency into our wallets . Wallets use the private key of the blockchain wallet address to access and interact with the blockchain. There are 2 kind of wallets :
Custodial wallet: Custodial wallet is a centralized wallet which keeps our private keys on their server and we need to create an acoount on their app or web platform to access our account and fund. Example of custodian wallets are: online web wallets, centralized exchange wallets etc.
Non-custodial wallet: It is a decentralized wallet where we own our private keys and there is no control of any authority . We can directly access and manage our funds of our wallet using the private keys . It is very much safe than the centralized wallets . Example of non-custodian wallets are: trust mobile wallet,tronlin wallet,metamask wallet etc.
If we talk about the transaction fees , wallets allows us to do the transaction in very cheap price and the transaction cost depends upon the network difficulties and blockchain. Different blockchain have different transaction fees and different transaction speeds. Transactions are automatically initiated and processed . There is no control of any authority regarding processing time and fees of the transaction in wallets specially in non-custodial wallets like the centralized exchanges. But in Custodial wallets the transaction fees may be higher than the non custodial wallets .
Exchange: Exchange is a digital trading platform to buy or sell (trade) our digital assets like buying or selling of bitcoin, ethereum, steem etc. Exchange is a online system and we can make instant transactions online in Exchanges using our assets. In exchanges there are 2 parties , one is buyer and other is seller. While doing any kind of buying or selling activity we have to pay the fees which is called commision. Comission may vary from one platform to another platform. Centralize exchanges control the whole system and our fund also. Trading fees, deposite or transfer fees etc. everything is managed by the central authority in Centralized Exchanges. We can see high transfer/withdawal fees and delay in transaction in the Centralized Exchanges. Similar to the wallets Exchanges also have 2 types: Centralized and Decentralized . Centralized exchanges are controlled by central authority . But decentralized exchanges are not operated by any central authority . There are lots of process we need to get through to use centralized exchanges . But in decentralized exchange we can connect our wallet to the exchange and we can trade / swap ina decentralized way . Our fund remain in our wallet .
Difference between Wallet and Exchange:
| Wallet | Exchange |
|---|---|
| Wallet are used to store the digital assets securely | Exchange is a trading platform where we can buy or sell assets |
| Wallets are very easy and convenient to use at anytime anywhere | Need some basic knowledge to operate Exchanges |
| Wallets process the payments faster instantly | Exchanges takes higher transfer fees and delays the transaction as well |
| Wallets are easy to setup | There are lots of steps that we nee to follow to use exchanges |
| Private key remain in the wallet or in our hand so there is no risk of thieft or hack | Centralized exchanges keep our Private key on their server , centralized exchanges are always in radar of hackers, in case of hacking of the exchanges we may loose all our money. |
| We dont need to do KYC ans such kind of things | To use exchanges we need to register and several other steps we need to fulfill like kyc or verification etc. |
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2- IN YOUR OWN WORDS, WHY YOU THINK PEOPLE SHOULD HAVE MORE THAN ONE EXCHANGE ACCOUNT?. DO YOU HAVE AN EXCHANGE ACCOUNT? AND WHY THAT SPECIFICALLY ?
There are several reasons why people have more than one crypto exchange account, i am going to discuss on those matters and they are as follows:
Features: Different crypto exchanges provides different kinds or varieties of services . Now a days peer to peer trading (p2p), futures trading and stacking are very popular services that most of the traders use at current time. But all exchanges doesnot provide these all services in their platform, people love innovative features so they migrate or use those exchanges which provides innovative products or services.
Volume: a volume and liquidity is very important thing in crypto trading, different exchanges have different listed coins and they have different volume or liquidity. We cant buy pr sell if there is high gap in price and it happens because of the low volume in related pair or exchanges. There we also face the issue mainly while selling if there is no proper volume in the trading pair .
Trading or Transfer fees: High Trading commission and high transfer changes are also one of the reason for having more than 1 crypto account. Different centralized exchanges have different trading commission and different transfer fees , it really impacts on the trading activities and on users. Users always try to find different platforms to save the cost and maximize profits.
UI/Interface, convinience and availability : Users love to trade on faster , smooth and easy to use platform, the interface must be easy to use , faster execution of trades and convenient to use the platform. Like mobile wallets , some of the crypto exchanges now have mobile and desktop applications. So, people prefer and try to use those exchanges which have smoothly working mobile application or desktop apps.
Security : Centralized exchanges are always in the risk of hacking and loosing the fund. People keep their hard earned fund into the exchanges so they try to allocate their fund into different exchanges to minimize the risk of theft of their fund.
Availability of Coin: There are thousands of coins in the crytpo market, different exchanges have different list of listed coins.Exchanges also have their own different rules and regulations for the listing of coins into their platform. All coins cannot be available in a single exchange platform so, people try to find alternative exchanges to grab the opportunities.
KYC and Restriction: Some crypto exchanges restricts the users from specific country or location due to new government rules and regulations, regulations are updated every year and at anytime exchanges can change the regulations as per government policies in which they are being operated, in such situation the user dont have any option except migration into other crypto exchanges. Another reason is KYC, some crypto exchanges strict kyc verification however there are several exchanges which have a set limit or not required verification to use or trade on their platform.
Delisting : It is the one of the major reason why people have account in more than one crypto exchange. In delisting news , price dumps and no one wants to sell bearing huge loss. Exchanges also give deadline to withdraw the assets from the exchanges. And users try to find some other alternative methods or exchanges to store or hold the assets.
Yes i do own my account in different crypto exchanges because there are 2 main several specific reasons which i want to Explain:
Convenience: Initially I had account in bittrex only but bittrex didn't have any kind of mobile apps and it was not convenient to use, i had to use the mobile browser all the time to check the price ,my trades and funds. I used to feel very comfortable every time logging into my bittrex account. That time binance launched an mobile app so i created an account there in binance and tried the app. I felt very happy while using the app and it was very convenient to use .
Volume and Delisting : As the binance was growing , they launched lots of promotional services to attract the traders , and most of the traders started moving into the binance. So, the volume moved from bittrex into binance , that time bittrex was the top exchange with highest volume . Gradually bittrex also started delisting of several coins and traders started loosing their funds due to delisting and dumps in the related pair prices, so most of the traders moved to other platform, i was also one of them who created crypto account in some other exchnages. I was holding several coins and 2 of them was delisted , due to fear and to move my assets i created my new account in some other exchanges.
3- WHAT ARE BETTER? WALLETS OR EXCHANGES.
Wallets and Exchanges both have important but different purposes. Wallets are used to store our assets securely and for payment purposes. We can access our mobile wallets anywhere , anytime and we can make transactions instantly . Non custodian crypto wallets like trust and metamask crypto wallets provide the freedom of decentralized wallet and we own the private keys and no one can access our wallet except the owner of the wallet. This is the best thing i like about the wallets. We can manage our fund in our own way, there is no central authority to access and manage our fund. Even if we loose our phone and wallet, we can recover and access our wallet and fund again using the secure passphrase key or the private key. Wallets are like cold storage wallets which is only connected to the internet while we are using it . Wallets are very much safe and secure in terms of security. Mobile wallets like trust app provides dapp compability where we can access all the decentralized applications(Dapps), we can also swap our assets from the wallet itself which is quite easy and wonderful feature. Decentralized exchanges (DEX) like pancakeswap, quickswap, uniswap has really changed the crypto space and we can use the decentralized exchanges just from the mobile wallet app, it is quite easy and superior feature of the wallets in current time.
Exchange is a trading platform that facilitates buying and selling of digital assets. Exchanges have very important role in crypto space. They provide wide range of products and services to the users. Exchanges get commission from the users who trade into their platform. In crypto exchanges we can also buy or sell our assets in fiat currencies . Exchanges provides innovative features which wallets doesn't provide like access to thousand of cryptocurrency . Crypto exchanges run 24x7 and all operations are handled by the system. Centralized Crypto Exchanges are operated by centralized authority who have full control over their system and fund of the users. Crypto exchanges also use the crypto wallets to secure and store the fund of all the users which is called hot wallets which is used for operational use . Hot wallets are always connected to the internet, in case of hacking , user fund is lost. And this is the biggest issue with the centralized exchanges which we have already seen in the past. Now there are lots of decentralized exchanges are available in crytpto mareket which can be used by all users only just by connecting their wallet to the dex, it is much more safe and secure than the centralized exchanges however the swap fees are high as multiple approval or confirmation needed to approve the transaction.
- In my personal view Both the wallet and exchanges are very important in crypto market . Wallets are only used to store and secure the assets but exchanges provide trading services along with lots of great features. Wallets have limited features and the purpose is only to store the assets but exchanges are not limited to trading or swapping only. Exchange provides easy to use interface , faster execution of trades and good volume or liquidity if chosen good exchanges. Wallets provides fiat support which is really helpful for all the users . Decentralized exchanges are becoming more and more popular and provides higher security. Without any registration and kyc we can use dex which eliminates all kind of restrictions from government or other authorities. In decentralized exchanges we can trade freedomly.
4-CREATE AN ACCOUNT IN A WALLET AND IN AN EXCHANGE OF YOUR CHOICE AND SHOW SCREENSHOTS OF THE PROCESS.
Wallets are available for multiple platforms like mobile(android/ios) , PC (windows/linux/mac) and web . I am going to show how you can install and setup mobile wallet (Trust wallet) .
- Step 1: Install the trust wallet from Google Play Store (android) or App store (ios)
- Step 2: Click on Create a New Wallet
- Step 3: Agree to the terms of use/Tick on the tickbox and click on Continue
- Step 4: Writedown or Save these 12 words of passphrase very safe and securely , it will be required to recover the wallet in case your phone is lost or damaged. By using these passphrase you can recover your wallet anywhere anytime. It is very important .
For security reasons the wallet app doesnot aloow to take screenshot. This image sources is : https://community.trustwallet.com/t/how-to-create-a-multi-coin-wallet/41
- Step 5: Now it will ask you to choose the provided 12 words passphrase correctly for verification and confirmation . Choose passphrase correctly in correct order and tap on continue.
For security reasons the wallet app doesnot aloow to take screenshot. This image sources is : https://community.trustwallet.com/t/how-to-create-a-multi-coin-wallet/41
- Step 6: You are done , your wallet has been created successfully , Now you can access and use your own crypto wallet in your phone.
There are lots of cryptocurrency exchanges are available in the crypto market, you can choose any exchange but i would recommend users to use top 10 crypto exchanges based on their volume and security.
Here i am showing how to register and setup your crypto trading exchange account in FTX Exchange. Normally the steps or process is same for all other exchanges . We are going to register an account in FTX (FTX mobile application)
- Step 1: Open google play store or app store to install the FTX Pro mobile application in your phone. imply search as "FTX" It will show your the app on the top of the list. Click on install the application . After installation open the app.
- Step 2: Click on Register
- Step 4: Now enter your email id and password , tick mark on user aggrement on terms and condition and tap on register . [I have hide my email id for security reasons]
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- Step 5: Now slide the icon to verify
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- Step 6: Now your registration process completed and your exchange account is ready . Now you can access and trade into FTX Crypto exchange from web and mobile application as well. To access all the features of the exchange , you have to do KYC and setup 2 step verification. For KYC tap on User tab and complete KYC.
To start trading , Fund your account by going to wallet tab:
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- Conclusion: Wallets and exchanges both are very important and has specific utility and purpose of their use. We need to be careful while chosing the wallets and exchanges. We should use non-custodial wallets rather than web wallets to hold our cryptos. There is always risk associated with web or hot wallets . While choosing exchanges we should check the safety features carefully and we must have to setup and activate 2FA security feature to avoid any kind of risks. Decentralized exchanges are better option now a days which minimize the risk and provides higher security.
Thanks Professor @allbert for this beautiful and interesting lecture. I'm looking forward to your next lecture.
Hello @sexualhealing, thanks for performing the above task in the first week of Steemit Crypto Academy Season 3. The time and effort put into this work is appreciated. Hence, you have scored 6.5 out of 10. Here are the details:
Remarks:
Overall, this is a decent work but could benefit from a clearer way of writing. You did really well in Question 2 and 4. They contained the most unique content in your work.
On the other hand, your answer to Question 1 has already been mentioned severally by other participants. We were looking for something new ideas or a different approach to the Question. Worse yet, your answer to Question 3 wasn't clear enough. You could have listed the benefits of your preference instead of muddling the information you provided.
As a suggestion, use new paragraphs to introduce new ideas. Additionally, it is advisable that a paragraph should be be within 50 to 90 words to achieve better reader experience. Some of your paragraphs were double that figure.
We hope you find this suggestions helpful and we look forward to your implementation in the next lesson.
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Thanks a lot professor for looking into my submission and definately i will try my best to improve my writing skill ! Thanks a lot for your suggestions !
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Dear Professor @asaj @allbert my post is not curated till now , please look into it @steemcurator02 @steemcurator01
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