Bitcoin wallet and exchange are two different inevitable components of BTC trading. You may say that both these are interdependent. Without one, the other will be worthless. Certain distinctions differentiate both these, and their respective functions are among those distinctions. To be a successful BTC trader, you should understand both these terms properly. “Bitcoin wallet versus exchange” is one of the most confusing queries in this field.
In the later section, a brief introduction to the BTC wallet and the BTC exchange is given. If you are determined to be a successful BTC trader, explore their differences well. Let’s explore the major differences between wallet and exchange.
Comparison of BTC Wallet and Exchange
Some of the major differences between the bitcoin wallet and exchange are given in the following table.
|BTC Wallet||BTC Exchange|
|It is software.||It is a currency converter source.|
|It is used to store the BTC coins safely.||It helps to cash out the BTC into usable local currency.|
|It is your personal BTC storage.||It is available locally to convert coins into cash.|
|The wallet has special keys for safety.||Exchange uses the wallet-generated keys to extract the coins.|
How Does Bitcoin Wallet Work?
As mentioned above, the bitcoin wallet is software that stores the BTC coins safely. When you start trading on the BTC platform, you have to create your wallet to register yourself. Once you have generated a wallet, you can use it in the future for storing your BTC.
A BTC wallet features some keys that are the basics of your BTCs’ security. No one can hack your account unless you leak private information to anyone.
Whenever you deposit funds to your BTC wallet, it generates two keys for future use. One key is called the public key, while the other is called the private key.
The public key is just like your email account and is used to receive funds in your wallet. This key is not hidden and is known to every person in contact with you. However, the private key is your secret code that keeps your funds safe and secure. If you leak this information, you will have to face great loss. It may result in hacking or stealing of the funds.
There are different methods to store this private key. You can store this key in the virtual wallet that you can get online. This storage method is called hot storage. Also, you can write down your private key in your diary. This storage method is called cold storage.
What is BTC Exchange?
Any cryptocurrency is not functional unless you convert it to the local currency. The same is in the case of BTC. You have to convert this currency into fiat currency like the dollar. This method of converting cryptocurrency into fiat currency is called BTC exchange.
There are different websites, investors, and other methods to convert cryptocurrency into functional currency. You can use any one according to your convenience.
Exchange not only assists in converting BTC into fiat currency but also fiat currency into BTC. You can use a similar platform to convert fiat currency into cryptocurrency. If the exchange center is unavailable, you can ask any investor to pay you money in exchange for your cryptocurrency. This is also the commonly used exchange method.
You can use other platforms such as coin base or Binance to convert your BTC currency into fiat currency. Here, you’ll have to make your account by fulfilling all the credentials. Once you have created the account on any platforms mentioned above, you can transfer BTC from your BTC wallet to the coinbase or Binance wallet. Binance and coinbase offer you a reliable platform to trade in cryptocurrency.
Bitcoin trading is very beneficial, but you should learn all about using this platform effectively. Along with other necessities, you should have a proper understanding of BTC wallet and exchange centers. Without owning the BTC wallet, you can’t store the currency safely. Similarly, without knowing the exchange, your earning is worthless. You have to convert your cryptocurrency into local currency to make it usable in local markets.
I am Lavinia by name and a financial expert with having a degree in finance from the University of Chicago. In my blog, I help people to educate by making wise choices regarding personal investment, basic banking, credit and debit card, business education, real estate, insurance, expenditures, etc.