In the world of cryptocurrencies, choosing between a crypto exchange and a crypto wallet can be difficult, as both options have their advantages and disadvantages.
Cryptocurrency exchange: what it is, its pros and cons
A cryptocurrency exchange is a digital platform where users can buy, sell and trade various cryptocurrencies such as: Bitcoin, Ethereum, etc.
A crypto exchange is an intermediary between a buyer and a seller. The user registers, verifies his identity and makes a deposit to his account. Next, he can place orders for the buying / selling of cryptocurrency, and a special algorithm of the exchange selects buyers.
DEX and CEX
There are two main types of cryptocurrency exchanges: DEX and CEX. We will go through each of them in detail below.
DEX (Decentralized Crypto Exchange) is a cryptocurrency exchange platform that operates on a decentralized blockchain network. DEXs do not rely on a central authority to manage trades and user funds and allow clients to trade directly with each other using smart contracts (programs that automatically execute trades when certain conditions are met). The most popular DEXs: Uniswap, Curve, PancakeSwap, OKX.
➕ They are less vulnerable to hackers.
➕ Do not require to go through the KYC/AML procedure, which ensures greater customer privacy.
➕ Allow users to trade with each other without intermediaries.
➕ Contains more variety of tokens, providing more options for trading.
➖ They have lower trading volumes.
➖ It takes a long time for transaction to be processed and confirmed.
➖ Some advanced trading features are missing.
➖ It is more difficult to use and require more technical knowledge.
CEX (Centralized Exchange) is a platform that also allows users to buy, sell, and trade various digital assets, but unlike DEX, operates on a centralized network and is controlled by a single organization. CEX has more control over the transactions that take place on the platform compared to decentralized exchanges. The most popular CEXs: Binance, WhiteBit, Coinbase, Kraken.
➕ Higher trading volumes, resulting in greater liquidity.
➕ Fast transaction processing and confirmation time due to the centralized nature of the platform.
➕ Wider range of trading features such as margin trading and API integration.
➕ A user-friendly interface that is easy for beginners to navigate.
➖ Centralized control, making them more vulnerable to hackers.
➖ Mandatory KYC/AML procedure, which may jeopardize user privacy.
➖ High commissions for trading and other services.
How to choose between CEX and DEX?
If you compare these two types of crypto exchanges, CEX is more popular among those who are just starting to learn about the world of cryptocurrency and crypto trading, because they have a proven reputation in the field of security and customer support. In addition, CEX offers more trading opportunities and a wider selection of trading pairs.
As you become more comfortable with trading and gain a better understanding of how it works and the risks involved, you can explore DEX in detail. DEXs are usually more popular among experienced cryptocurrency users who prioritize decentralization and p2p trading without intermediaries.
Ultimately, choosing between CEX and DEX comes down to your personal preferences and priorities. Some advanced users may choose to use both types of exchanges depending on their specific needs.
Crypto wallet: what it is, its pros and cons
A cryptocurrency wallet is like a digital bank account that allows you to securely store, send, and receive cryptocurrency. To receive cryptocurrency, you provide the sender with your wallet number, to send - enter the recipient's wallet number and send cryptocurrency.
Custodial and non-custodial crypto wallets
There are such types of cryptocurrency wallets as custodial and non-custodial. Let's go through each of them.
A custodial crypto wallet is a type of digital wallet in which a third-party service provider stores the wallet's private keys on behalf of the user. This means that the user does not have full control over their cryptocurrencies, as the service provider can access the private keys and thus the funds stored in the wallet. Examples of custodial wallets: Coinbase, Binance, Kraken.
➕ Easy to use;
➕ Offer better customer support and security features;
➕ A good option for beginners who are not yet comfortable managing their private keys.
➖ Savings of funds is entrusted to a third party;
➖ More vulnerable to hacker attacks;
➖ Limited list of available cryptocurrency or tokens;
➖ Mandatory KYC / AML, which does not ensure confidentiality and anonymity.
A non-custodial crypto wallet is a type of digital wallet where the user keeps their own private keys. The wallet user has full control over their cryptocurrencies and can access them at any time. Examples of non-custodial wallets: MetaMask, MyEtherWallet, Exodus, Ledger Nano S.
➕ Users have full control over their private keys and funds;
➕ Are more anonymous, because passing KYC / AML procedures is not mandatory;
➕ Support a wider range of cryptocurrencies and tokens;
➕ Funds will not be affected in case of hacking.
➖ If you lose your keys or password, you can permanently lose access to your funds;
➖ Less convenient for users, because effective use requires additional technical knowledge and experience.
How to choose a wallet?
Custodial wallets are often used by beginners or people who are not very tech-savvy because they are generally easy to use and require less technical knowledge. Non-custodial wallets are often used by more advanced users who are comfortable managing their private keys.
Which is better to choose: a crypto exchange or a crypto wallet?
The choice between a crypto exchange and a crypto wallet always depends on your needs and level of knowledge in the field of crypto and/or crypto trading. If, after the provided information above, you still do not know what is better to choose, then the situations below can help you.
«I am a newbie and want to start working with cryptocurrency.»
Feel free to choose CEX crypto exchange and/or custodial crypto wallet, because they are the most user-friendly in terms of interface, speed of transaction processing and wide selection of trading functions. Also, custodial wallets provide high protection of crypto assets, which is a significant plus.
«Crypto is my lifestyle and I am currently looking for a trading and/or storage platform.»
Advanced users are best suited to a DEX crypto exchange and/or a non-custodial crypto wallet, as they offer a greater variety of tokens to trade and allow users to trade with each other without the involvement of intermediaries. A non-custodial wallet is best suited for those who have been around the crypt and know and understand what and how it works.
Any.Cash crypto wallet as an alternative to custodial wallets
Any.Cash crypto wallet is best for beginners as it is easy to use, allows you to buy, sell, securely store and exchange crypto to fiat and vice versa and works with such currencies as: BTC, ETH, LTC, TRX, USDT, USD, EUR , UAH, UZS, KZT.
Its main advantages:
➕ Multi-currency wallet;
➕ Simple KYC procedure;
➕ Fast transactions;
➕ Low commissions;
➕ Works as a Telegram bot;
➕ Modern methods of transactions encryption;
➕ Convenient interface;
➕ 24/7 support;
➕ Verification via "Diia" (for Ukrainians).
Go to AnyCashBot and check all of its advantages yourself.
Of course, we cannot make a decision for you, because the choice between a crypto exchange and a crypto wallet depends on your specific needs, preferences and experience in the world of cryptocurrencies. Therefore, before choosing the platform that best suits your needs, carefully study the advantages and disadvantages of each and understand what you need.