Difference between a bitcoin exchange and a bitcoin wallet
People messed up the bitcoin exchange and bitcoin wallet, and they get confused when they get to know that they are different things. There is an inbuilt bitcoin wallet in an exchange called an exchange wallet. Still, the bitcoin wallet is separate from the exchange, and we do not call it to exchange wallet, i.e., bitcoin exchange wallet and bitcoin wallet are different terms that we will understand. Many people research when they are likely to buy bitcoin or other crypto coins, but they stick to differential wallets because of the tremendous amount of wallets on the internet; you can also read here bitlq.net .
Bitcoin exchange in brief
Bitcoin exchanges provide a centralized website or application to the bitcoin or crypto users that let you buy and sell this digital currency and other crypto coins that a bitcoin wallet does not provide. It is a platform that charges money for using its bitcoin transaction services because the interface and user experience are so simple that every ordinary person can use them efficiently. Most bitcoin or crypto users use these third-party exchanges to do transactions or purchase and sell etc.
What is a Bitcoin wallet?
Bitcoin exchanges also include an inbuilt centralized wallet. Still, the bitcoin wallets are open source separate wallets that give you the keys (private key and public key), which means you have control over all the transactions, i.e., bitcoin spending and receiving. It does not have enough facilities as the bitcoin exchanges provide; still, it is the medium of spending, storing, and welcoming. There are two types of bitcoin wallets given below:-
1. Hot wallets: Hot bitcoin wallets are directly connected to the internet, which means you need access to the internet before using it; otherwise, there is no use, and you can check the latest balance by refreshing it.
2. Cold wallets: Cold bitcoin wallets do not need internet access as the name describes. It is not present on the internet but instead in the physical form of a paper or pen drive known as a paper wallet or hardware wallet.
Bitcoin exchange vs bitcoin wallet
There are the following comparison points of bitcoin exchange and bitcoin wallet given below:
1. Meaning: Bitcoin exchange wallet is an in-build wallet that you can access by opening the bitcoin exchange application or website. A bitcoin exchange provides many more features than a bitcoin wallet, so people love to exchange for bitcoin trades. Bitcoin wallets are separate wallets that give you full access or ownership to the wallet so you can use it as your product, and you do not need the consent of other people or organizations.
2. Private and Public keys: In exchange bitcoin wallet, the founder or managers of the bitcoin exchange have your private key, which means they have access to your spending, and without their consent, you cannot do a transaction. If you break their regulations, then your transactions will fail, and it is a limitation to the users even if you have the public key for receiving these digital coins. Bitcoin wallets will give you access to both keys (public key and private), which means you can spend your bitcoin wherever you want and whenever you want without taking a third person's permission. You can receive bitcoins by sharing your public key with another person. Here, the private key is like the ATM pin that you will spend to use your funds, and the public key is like your account number to receive the funds.
3. Buying and selling: The bitcoin exchanges come into existence because of buying and selling of digital currencies because the bitcoin wallets do not provide this facility to the bitcoin users. The bitcoin wallets work as a medium of sending and receiving but not purchasing via cash and selling for money. Various Bitcoin exchanges provide various online payment methods for buying different crypto coins, not just the bitcoin.
4. Customizable fees: Since the bitcoin wallets are open source wallets, the users have the ownership and can customize the costs according to the purpose of their transactions. The bitcoin trade prices go to the miners to check the valid transaction and prevent fraud. You will get the option to edit the fees section by filling your own, but in the case of the exchange wallet, you can only read the fees. The third persons have access to the whole exchange, so they set their fixed costs on every transaction to make money in exchange for the facilities they provide to the users.
5. Tracking: The people behind the bitcoin exchange can track all the transactions and crypto because their server records all the activities on the exchange. But in the bitcoin wallet, no one can track your actions and your identification.