Where are your coins actually when you put them on an exchange/wallet?

In the following, "wallet" refers to a decentralized wallet, and "exchange" refers to a centralized exchange.

There are only two types of coins in the world: those you can control and those you cannot control.

—— Pai Pai

Looking for people in the currency circle to ask such a question, "Where is your currency?" 90% of people will answer [wallet] or [exchange]

(The remaining 10% of monsters will have a confused face, "Where did I put it?")

In fact, the so-called storage in wallets and exchanges does not mean that the coins are placed in the databases of wallets and exchanges. All the coins in the world are still stored on the blockchain. The main difference between putting it in the wallet and the exchange is that everyone has different forms of control over the currency.

There is a saying "Not Your Keys, Not Your Bitcoin", which means that the one who really controls the mnemonic (private key) is the one who really controls his own currency.

But in daily life, there are actually very few people who really understand and independently control assets, and there are still many users who deposit in exchanges.

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Where are your coins when you deposit them on an exchange?

The recharge steps of general exchanges are as follows:

1. The exchange generates a deposit address

2. You transfer coins to this address

3. After the exchange checks the transaction on the blockchain and confirms it, it will be recorded.

4. Your corresponding balance increases.

First of all, in order to facilitate centralized management, the exchange will not provide the mnemonic (private key) of the account to the user, so the highest control of this currency is in the hands of the exchange, so your in the exchange The essence of the balance is a number fed back to you by the exchange's database, and it can also be understood as an IOU issued by the exchange.

Further reading:

Further reading:

1. Usually the exchange will regularly sort out the address balance, and transfer the assets on most user addresses to a certain address. Therefore, sometimes when you search for your own exchange address on the blockchain browser, you may find that the assets have been transferred. It is the exchange that is sorting out the balance, as long as the balance in the exchange can be matched, there is no need to worry too much.

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Where are your coins when you store them in your wallet?

Friends who have used wallets have been reminded thousands of times: Be sure to memorize the mnemonic (private key) (you can search the article "Small Science: What Are Private Keys and Mnemonics" in Bitpie Weibo)

The reason why the private key and mnemonic are so important is because it is the highest authority to control blockchain assets. Deposit coins in the wallet, sending and receiving are completely free, and no one will review your account entry and withdrawal behavior.

Some children think that depositing coins in the wallet means transferring the coins to the wallet. In fact, this is a big misunderstanding. As mentioned above, all the coins in the world are stored on the blockchain. The main function of the wallet is It is to generate mnemonic words, currency collection addresses, and help everyone interact with the blockchain. For example, the balance in your wallet is displayed for you after the wallet reads the balance of your address on the blockchain. If you do not have a wallet, operate Assets on the blockchain require certain coding capabilities.

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So do we need to store all the coins in the wallet?

Because the above analysis is mainly from the storage, sending and receiving scenarios, these scenarios are the advantages of the wallet, so it sounds like the wallet will be better than the exchange, but is this really the case? Nonsense, of course it is. Once I am a wallet, can I praise the exchange without boasting about the wallet? ? ?

Okay, let’s praise the exchange next... Talking about how users should store assets is of course based on the user’s daily usage scenarios. If it is a frequent and heavy transaction party and will not store any digital assets, The first choice is definitely the exchange.

If it is a mild transaction demand, or even a fixed vote party that only enters but cannot enter, the wallet will be the best choice. (Bitpie has one-click trading, currency exchange and other functions, and wallet party wants to trade, which can also be very convenient!)

Of course, what is more suitable for most people is to put most of the long-term immobile coins in the wallet, and a small part of the coins in the exchange to solve the problem of itchy hands.

Pai Pai I don't think centralized exchanges are evil. The emergence of exchanges has greatly improved the liquidity of blockchain assets and played an important role in the popularization of blockchain.

Whether you choose an exchange or a wallet, there is no right or wrong. After everyone understands the logic behind wallets and exchanges, it is most important to customize an asset allocation and storage solution that suits you.

For example, my 20,000 bitcoins are kept very well, and I can't even find them myself.