With cryptocurrency wallets, control over your digital assets is entirely yours. Given the ease of use, the fact that most major exchanges will set up your exchange storage for you, many investors just leave their funds on exchanges without giving it a second thought. Keeping crypto on an exchange lets you to quickly trade digital funds for other crypto and fiat. Why do people leave themselves open to such risks? Convenience. Anything that impacts the exchange-hacks, network problems or finance issues, like when OKCoin was broken into-also impacts your funds and your ability to use them.
But this leaves investors with exchange accounts open to risks. When it comes to wallet vs exchange storage, the exchange controls the coin and basically promises that you own a share of the exchange’s assets. In short, with a bank, you don’t completely control your money at every moment.Īnd the same is true when you store your cryptocurrency on an exchange. Furthermore, banks can use the money you deposit to issue loans or make investments. When your money is sitting in a saving account, your access to it and what you can do with it (withdraw, spend, etc.) is determined by the bank’s policies. dollars are really just IOUs the government promises to honor. So what does that mean? There are a few analogies that can help clarify, but perhaps the most illustrative is the bank vs wallet analogy. On an Exchange, You Don’t Completely Control Your Crypto
But when you keep your crypto on an exchange account, sometimes referred to as an “exchange wallet,” you share control of your crypto with the exchange itself. When you use a cryptocurrency wallet, you and only you are in complete control over what happens to your Bitcoin. There’s one key difference between using a crypto wallet vs exchange account to store and manage your digital assets. But what distinguishes one from the other? Cryptocurrency Wallet vs Exchange Storage: Who Really Controls Your Crypto? Others leave their funds on a secure cryptocurrency exchange. What is the difference between a cryptocurrency wallet vs exchange? Some people use several cryptocurrency wallets to store your digital assets.
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