For those of you who are used to struggling in the world of Bitcoin and Blockchain, you will surely smile when you hear the question “What is the difference between the Bitcoin Exchange with the Bitcoin Wallet?” Since the two are clearly different. But you will be surprised at how many people out there don’t really understand these two things and sometimes think of them as the same thing. This article was created specifically to describe in more detail what is the difference between a Bitcoin exchange and a wallet.
Bitcoin Exchange is a term for companies that provide a special platform that can be used by people from various countries to exchange Bitcoin for fiat currencies (such as US Dollars, Euros, Yuan, Rupiah, etc.) or with other digital assets. For example, Indodax is a Bitcoin Exchange in Indonesia that you can use as a place to trade your Bitcoin for Rupiah or exchange it for free to other digital assets available in the market such as Ethereum, Litecoin, Dogecoin, DASH, Ripple, and various digital assets the other.
Bitcoin Exchange usually provides a temporary wallet to accommodate fiat currency balances or digital assets that will be traded by users. For example, Indodax provides a temporary wallet to hold the balance of Bitcoin, Rupiah and other digital assets supported by the market to facilitate its users in trading. When you want to sell Bitcoin to Rupiah on Indodax, you must first move Bitcoin from your personal wallet (or it can be from Exchange or other companies such as cloud mining companies, faucets, etc.) to temporary wallets available in your Indodax account. After making a Bitcoin deposit, you will see your Bitcoin balance in an Indodax account and from there, you can easily sell it to Rupiah.
If the Bitcoin exchange is established with the aim of serving the process of trading digital assets, the Bitcoin wallet, or the Bitcoin Wallet, is created purely to store or send Bitcoin only. The shape of a Bitcoin wallet is very diverse with different interfaces. You can see the types in Cointelegraph’s infographic.
To make it easier for users to transact from various devices, there are now many companies engaged as wallet providers, such as Blockchain.info, Copay, and Airbitz. Unlike the Bitcoin Exchange, a company that operates as a wallet provider does not provide a Bitcoin trading platform, unless the company also operates as an exchange, for example: Coinbase.
When you create a wallet on a site like Blockchain.info, you will get access to a Bitcoin wallet that can only be used to store and send Bitcoin. You can think of it as an ordinary wallet that you use to keep your banknotes which can certainly be taken at any time and moved to another place. But unlike a wallet for cash, this Bitcoin wallet is more like a bank account book that records all your transaction listings since the wallet was first created. When you send / receive Bitcoin, how many Bitcoins are transacted, and from where or where is it traded, everything is clearly displayed there. More great again, you do not need to check your transaction history only through the Blockchain.info site where you make a wallet. If the Blockchain.info server is down, you can still check it on various other sites. You can also still access your Bitcoin wallet as long as you backup it well.
Difference between Bitcoin Exchange and Bitcoin Wallet
From the explanation above, we can conclude one important point that distinguishes between a Bitcoin Exchange and a Bitcoin Wallet that is from the form of services provided. You cannot sell or buy your Bitcoin in your Bitcoin wallet, and although you can store your Bitcoin in a temporary wallet provided by a Bitcoin Exchange, a Bitcoin wallet can provide extra comfort, convenience and security without a server that is rarely provided by Exchanger. If you imagine Bitcoin as gold, a Bitcoin Exchange is a gold shop where you can sell / buy gold with Rupiah, while you can think of a Bitcoin wallet as a personal safe that you can make as a place to store gold. The safety level of the safe you can set yourself at will, and only you hold the key to open it without having to depend on anyone. The difference with gold, ‘safe’ Bitcoin can be easily stored in your smartphone and can be taken anywhere to spend.