Jan 17 | 3 min read
Decentralized exchanges, centralized exchanges, and wallets offer different opportunities for people to buy and store cryptocurrency.
A centralized exchange (or CEX), e.g. Coinbase or Binance, is a company that facilitates the buying and selling of assets. A CEX takes custody of funds and can shape — and reshape — the rules that govern the platform. Too often in crypto, they’ve proven vulnerable to hacks and theft.
In contrast, decentralized exchanges ( or DEX), — for example, Uniswap or Sushiswap — are autonomous decentralized applications (Dapps) that enable buyers and sellers to exchange their cryptocurrency without losing custody of their funds. They operate 24/7 and remove the need to trust a third party to manage trades.
Broadly speaking, a crypto wallet is a digital wallet that allows users to store, manage, and trade their cryptocurrencies. It is your identity when you buy Bitcoin, Eth or any other cryptocurrency. Your its address and what you’re buying and selling is recorded on the blockchain.
A crypto wallet also stores the public and/or private keys for cryptocurrency transactions. A public key is like your bank account number. You can share it with other people or institutions, so they can send money to you or take money from your account when you authorize it. These people usually view your public keys as a wallet address — a hashed, or more compressed, version of that public key.
A private key, on the other hand, is like your bank account password or the PIN to your debit card. Anyone with access to your private key, will have access to all of your assets stored in your wallet, so it’s critical that you keep your private key a secret.
As a purely digital currency, cryptocurrency isn’t directly held within your wallet; instead, the wallet stores information about your public and private keys, which amount to your ownership stake of the cryptocurrency. Using these keys, you can send or receive cryptocurrency while keeping your private key encrypted.
Index Coop is a decentralized autonomous organization (DAO) that powers structured decentralized finance (DeFi) products and strategy tokens using smart contracts on the blockchain. We offer a suite of sector structured products, leverage and inverse products, and yield-generating products. We aim to create products that are simple to use, accessible to everyone and secure. Our products are built on Set Protocol, a twice-audited, self-custodial DeFi tool that allows for the creation and management of Ethereum-based (or ERC-20) tokens. Among users, partner protocols, and our composable products, Index Coop maintains one of the largest partnership networks in the DeFi ecosystem.
First, you’ll need to create an Ethereum wallet like Argent, Metamask, Gemini, or Rainbow.
Next, you’ll set up your new wallet and connect your bank account.
You can also earn or buy DPI tokens directly via your favorite decentralized exchange.
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