Cryptocurrencies are more than a decade old. At least Bitcoin is. Even with that knowledge, and we can say the longevity of digital currencies, they remain rather mysterious. If this is your first meeting crypto the matters are even worse. It is difficult for beginners to wrap their heads around this novelty. Investing in crypto is in many ways similar to regular investments, but in various aspects, it’s nothing alike. This is what confuses many people wanting to get the hang of it. The worst part is that once you get the idea of what’s what and where' to go, new choices are put in front of you.
One of the decisions you’re going to face when you start working with digital currencies is whether to go with a wallet or exchange. Right now, we can already guess that you have no idea what we’re talking about. There’s no reason to be worried, as we’re going to dig deeper into the details. In order to have fun and success with crypto, you need to learn the difference. Considering the mystique covering cryptocurrencies you’re probably eager to know which one is safer. With the tales about the two already making rounds on the web, many people ask are crypto wallets safer than exchanges. There’s no one right answer, so please keep reading, as we give our best to educate you on the subject. First, let’s see what is a crypto wallet.
Crypto Wallets
Now, this is not a wallet in the literal sense of the word. But, actually, it is a wallet, just in the form of a program. This program is designed in such a manner that it stores your coins. If the wallet is the option you choose you can select either a cold one or a hot one. The difference is their status on the network. A cold one is working offline, while the hot one is always online. If you think logically about it, the cold one has more advantages as it is a safe bet and offers more protection from cyber attacks. When it comes to digital currencies everyone is overly focused on security, as anyone should be, don’t get us wrong.
What’s important to know when it comes to the wallets, is that even if they’re your property you can’t have access to them at all times. The reason is simple. You need two keys to open it – a public one and a private one. This is an additional measure of security, and without both keys, you’re unable to access the coins stored inside of your wallet. The reason why most people opt for a wallet is precisely its security of the highest level. Other traits that are appealing to individuals are of course accessibility which is on the highest level, and of course the design of a wallet that is intended to store cryptocurrency long term.
Crypto Exchanges
When it comes to exchanges they’re a different beast compared to wallets. Yet, many people opt for this way of storing their crypto. The reason why things are like this is that exchanges are designed for crypto operations. Once you’re a member of an exchange you can buy, sell, and trade cryptocurrencies. Yes, it goes for every imaginable crypto including the most popular and the oldest digital currency Bitcoin, as well as Dogecoin, Litecoin, or Ethereum. Exchanges offer security too, in addition to their offering to sell crypto at fixed prices.
So, how do they work? Most exchanges are designed as websites. Once you create an account you’re eligible to exchange your fiat currency and buy crypto. This is where' the fun begins as you can trade crypto as much as you like. Once you’re done and let’s say that you’ve earned plenty, you can convert your hard-earned digital currency back to fiat currency. Of course, exchanges offer the choice of replacing crypto with crypto, it all depends on what your goals and plans are. In a way, you’ll be feeling like you’re Michael Douglas operating on Wall Street. Without an exchange, your options of attaining a digital currency would have to rely on buying it from a person or mine it. This operation, both of them, would also require you to win a wallet. So, if the exchange is your option, you probably don’t want to rely on a wallet. Anyway, at all times you want to be aware of what is going to happen with your crypto, and this is what preoccupies you more than anything else. Below, we’re going to conclude our debate.
Which One Offers More Security?
While people often try to decide between- these two, the thing is, you should have both, if you ask us for your opinion. Their functions differ a bit, so you can’t be fully satisfied with only one option at all times. If it’s about storing, wallets have the advantage. But, if you want to move your crypto around, and make it work for you, the exchange is the right choice. The bottom line, and a hard fact, is that wallets are a safer option. This is what you came here to hear, and we hope that you are satisfied with the answer. The primary reason for this opinion, that most people engaged with crypto share, is that wallets are designed to keep your digital currency safe. This is their first task.
When it comes to exchanges, they are there to make you engage the world of crypto. It is all about wheeling and dealings. Selling fiat, buying crypto, trading crypto, exchanging crypto, and getting back out with more fiat currency than you had when you entered the fray. Furthermore, many exchanges work on a fee. Their service cost, as they’re owned by third parties. Yes, you’re guaranteed your security to an extent. But if you explore the web a bit, you’ll find many stories about hacked exchanges that left many people without their valuable crypto. So, to repeat it once again. In matters of security, we are guaranteeing that wallets are the better option compared to exchanges in the terms of safety and security.