Continuing our series of article about cryptocurrencies and retirement, here we’re going to talk a little about currency exchanges. An exchange is basically an online place to store your cryptos. It also serves as a place to buy and sell your Bitcoins, as well as other digital currencies. Exchanges, like any other service, have their pros and cons as well as fee structure.
Adam Bergman, IRA Financial Group President, discusses what currency exchanges are and the different ones available to you in his new book, How to Use Retirement Funds to Purchase Cryptocurrencies in a Nutshell. Here’s a little bit from the book –
With respect to what a cryptocurrency exchange is, it is important to remember that a cryptocurrency exchange is different from a Bitcoin wallet. In the example I just mentioned with Ben and Chris, Ben already had his Bitcoins in a wallet, which means he had already purchased the Bitcoins on an exchange or received them for mining activities. A cryptocurrency exchange offers a platform through which Bitcoin buyers and sellers can transact with each other. A wallet is simply a digital storage service where Bitcoin holders can store their coins securely. To be more mechanical, Bitcoin wallets store private keys that are used to authorize transactions and access the Bitcoin address of a user. Most Bitcoin exchanges, such as Coinbase, provide Bitcoin wallets for their users, but may charge a fee for this service. A Bitcoin exchange is a digital marketplace where traders can buy and sell Bitcoins using different fiat currencies or altcoins.