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)

Wallets and exchanges are two of the most important words we will hear in our crypto trading adventures. These two are mostly used interchangeably by a lot of people because they don’t really know the functions of each of them. I will be talking about these two in detail.

WALLETS

In everyday life, we use wallets to hold money. The same applies for the cryptocurrencies. We use our crypto wallets to hold our crypto assets. It has relatively higher security than an exchange owing to the fact that you have sole control of your private keys and with the keys being the only way to access your crypto, your crypto currency is more secure and safe and makes wallets the best option to hold your crypto assets.

Wallets have public and private keys that allows you access to your crypto. They’re basically keys to the vault or sage where your crypto assets are kept. The public key allows you encode messages and identifies you whiles the private key allows message decryption and proves that you own the public key. It is risky to provide your private keys to third parties as this will give them access and control over your account. If you ever have to, it will be best to only give your public key to third parties.

Advantages of wallets over exchange

• Wallets have higher security compared to exchanges because only you have access to your crypto with your keys
• A wallet is generally better for long-term crypto storage because of their higher security
• Easy acess: In your wallet, your crypto is easily and readily accessible

Wallet Types

We have 2 types of wallets depending on whether crypto is available online or offline. Whatever wallet type we choose to use, it is good we have a backup of our keys because we lose access to our crypto if we lose our keys.

• Cold wallets: This wallet types allows us access to offline storage of our crypto currency. You could have your crypto data programmed into a pendrive and your crypto can only be accessed with the pendrive connected. This reduces the risks to hacks and compromised security.

• Hot wallets: This saves transaction data using blockchain technology and is available online. You need an online connection to use this wallet type, just like an exchange.

Exchanges

Just like the name would suggest, exchanges are where we exchange or trade our crypto assets. It provides a platform that facilitates trading from one coin to another. Now here’s one possible cause of confusion between crypto wallet and exchange. Some crypto exchanges like Binance and Coinbase have internal wallets built into them. This allows them to both store and trade crypto currency. An exchange wallet might be preferred by people who plan to use the exchange services regularly.

However, the downside to using an exchange wallet is that your crypto currency is exposed to a risk of hack. What you need to realize is that the exchange has access to your keys also, so you technically don’t have total control of your crypto currency as your crypto currency is saved in their wallet and they offer you access to it. If the exchange doesn’t properly protect your keys, you stand the risk of a hack.

Advantages of Exchange over wallet

• Exchanges allow us trade crypto assets: We can buy and sell crypto on assets exchanges

• With exchanges, we can send crypto to and from our crypto wallets

• Conversion of our fiat to cryptocurrency

Differences between Exchange and Wallet

Parameter	Exchange	Wallet
Availability	Only available online	Cold wallets offer offline access to crypto
Recover	You don’t lose your crypto when you lose your keys as they offer recovery of your keys since they have access to it	Lost keys can not be recovered hence assets are lost
Ownership and Control	For a centralized exchange, you don’t have 100% control of your cryptocurrency because exchange crypto is stored by exchanged	You have 100% control and ownership of your crypto because only you have access to your keys
Security	Crypto is less secure	Crypto is more secure
Transaction Speed	Slower transaction speed	Faster transaction speed
Minimum Withdrawal Limit	Withdrawal limits varying depending on crypto	No limits limits

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?

It is better to have more than one exchange account for a variety of reasons. Some of them are:
• Some cryptocurrency are found on some exchanges and not others. Having many exchange accounts, you get access to wide range of cryptocurrency from different exchanges

• Fee flexibility: Exchanges have different fees for crypto currency and it is better to use more than one exchange to find what fees best suit you.

• Special Services: For investors who want a little more than just trading, for example investors who want to stake their crypto, you need to find an exchange that allows the staking of your asset. Say Coinbase doesn’t have TRX staking but Poloniex does, you can use Poloniex for your TRX staking whiles using Coinbase for ALGO staking since Poloniex doesn’t support it.

I have a Binance and Poloniex account. I use Binance honestly because I am a beginner in the crypto world and it just has a simpler and friendly interface for me. The Binance Lite feature gives me a very simple interface where even beginners and dummies like me can understand and interact. They trade in a wide range of crypto and have a lot of the coins I have interest in. Also the fees for transactions are okay for me.

Like I mentioned earlier about special services, I recently learned about staking in one of this week’s lectures, and I created a Poloniex account to stake my Tron and earn stake rewards.

What are better? Wallets or exchanges.?

If you asked me whether a spoon is better for eating or a fork is, I’d answer depending on what I want to eat. Whether a wallet or exchange is better for use will depend on what the needs of the user. Each have what they’re best used for and saying directly that one is better than the other would be wrong.

You will also need to weigh the pros and cons of using each one of them before you decide which one suits your interest. For example, an advantage of an exchange is that you can recover keys when you lose them. The downside to this is that the exchang having your keys exposes you to risks of hacks. With wallets on the other hand where you can’t recover your keys once they’re lost, your account is more secure and safe because you’re the only one that has access to your keys.

Wallets are better suited for storing or holding crypto since they’re more secure. Hence a user that wants to do store your crypto long-term, a wallet would be better for you because it is more secure and offers you easy access to your crypto.

On the other hand, users who want to trade crypto, buy and sell, an exchange will be better. You can hold your coins here for a short term as you prepare to do a transaction. Without an exchange, users will have to find a seller or buyer on their own, negotiate and settle on a price. This definitely is not going to be easy.

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

I will take the opportunity of this assignment to create one more exchange and wallet account. I will create a Huobi exchange account and a trust wallet.

Creating my Huobi exchange account

To create my Huobi Global exchange account, I first log onto their website [huobi.com](https://www.huobi.com/en-us/)

_{screenshot taken from huobi.com and edited in paint application}

This is what I saw on the signup page. I filled in my information and hit sign up

_{screenshot taken from huobi.com and edited in paint application}

A verification code was sent to my email which I entered as the verification code

_{screenshot taken from huobi.com and edited in paint application}

After verifying the email, my account is created. Easy!

_{screenshot taken from huobi.com and edited in paint application}

I can now start my crypto trading activities

_{screenshot taken from huobi.com and edited in paint application}

Creating a Trust Wallet

I go to the apple store, search Trust Wallet and tap get to download the trust wallet app. I patiently wait while it download.