Exchange platform is introduced to help user's maximize trading activities such as having access to multiple crypto pairs for example a trader can be able to exchange more than 20 different pairs to another token in an exchange platform and also perform multi-task earning activities like staking, low discount fees, having access to bonus and other important crypto news and announcements of newly introduced token.
Wallet a digital software application for holding, staking, storing, and receiving a digital token a wallet can be an offline or an online storing bank for users to access, store and make digital transactions.
Difference between exchange and wallet
| Exchange | Wallet |
|---|---|
| Users don't have complete control over an exchange platform this means that most exchange platform is centralized and control by a group of bodies like the exchange authorities | A wallet provides users with phrase keys or seed phrase with these keys users are in complete control of their wallets activities like transaction and storing of the asset. |
| Exchange | Wallet |
|---|---|
| In exchange, users enjoy a special opportunity like a discount on trading fees bonus for holding a certain token on their exchange wallet | Holding your assets like bitcoin or any other token in any wallet doesn't provide users with special discounts or bonuses. |
| Exchange | Wallet |
|---|---|
| Exchange platform provides users with multiple tokens/pairs that can be exchanged for another token and conveniently exchange digital assets to fiat | In a wallet no much option for users to exchange/convert their token to multiple tokens. |
| Exchange | Wallet |
|---|---|
| No option for users to add tokens of their choice in an exchange | In a wallet, a user can add a contract token of the new token which means a user can add a new token of their choice in a wallet. |
| Exchange | Wallet |
|---|---|
| Security depends on the exchange platform | wallets are highly secure with users control over their wallet |
| Exchange | Wallet |
|---|---|
| Users can always recover passwords if forgotten | Password can not be recovered when missing |
One very distinct difference between a wallet and an exchange is that a wallet is more secure and highly protected against external threats there also different types of wallets which includes cold and hot storage wallets the cold storage wallet are more secure as they can be operated offline without internet connection.
While a distinct exchange platform different from wallets is it allows traders to trade/exchange different crypto pairs, you can always recover or change the password when missing or forgotten also mining pools and staking pools are available for users to earn extra rewards that wallets don't provide.
In terms of fees operations performed in an exchange and wallets are.
In an exchange, traders get discounts on transactions, for example, poloniex exchange uses TRX as it native token for performing transaction such as making a withdrawal when a trader uses trx to make withdraw he enjoy a certain reduction in transaction fee.
In the case of a wallet, you make a transaction operation in terms of network fee if users will be sending bitcoin to another person he will be charged base on the bitcoin network fee.
There multiple reasons why I think traders/investors should have multiple exchanges accounts.
Crypto pairs/token; there are thousands of different crypto pairs available today in the market and it will be very exhausting for a particular exchange to list all these available pairs in its exchange with multiple exchange accounts a trader can have access to different pairs in different exchanges
Trading discount and fees; with multiple exchanges, a trader can be able to compare transactions fees in different exchanges to see which is more favorable so they can use them for their trading activities.
Maintenance; There are times where the exchange would want to carry out maintenance services in this process all trading activities will be on hold a trader can use his alternative exchange to carry out his trading, activity in another exchange while he waits for maintenance to be carried out.
I have friends who prefer using an only exchange account for all their trading, storing of crypto their reason is with an exchange platform you can do everything a wallet does.
I respect their opinions base on the question if I would choose which is better I will go with the wallet reason are if I can control my wallet I can control my funds/assets.
Security is every user's priority and a wallet provides more security.
Also with a wallet, a user can have access to a decentralized exchange where you can connect your wallet to an exchange and perform all your trading activities.
Base on the above-given opinion a wallet is better than an exchange.
Conclusion
Both wallet and exchange are very important as a crypto user it is recommended to have a wallet for storing and holding crypto and also to have an exchange account for easy convenient means of exchanging your crypto pairs.
Interestingly both can be accessed freely, users can have multiple wallets and exchange account.
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All screenshot was taken from my created exchange and wallet account.
