Wallets and Exchanges: Who Holds Control?
An account balance and personally controlling the keys represent two different relationships.
In One Sentence
A wallet is a tool that helps manage keys and construct and sign transactions. Asset balances and ownership states are recorded on the network; a wallet is not a container holding token files. Assets in an exchange account are generally held and managed by the platform on the user’s behalf.
Everyday Analogy · and Its Limitations
A wallet is like a key-management tool for access rights, while an exchange account is like an internal ledger maintained by a service provider. This analogy does not mean that any platform offers bank-like protections or bears the same legal responsibilities as a bank.
The Correct Concept
With self-custody, you are generally responsible for safeguarding recovery information and reviewing every transaction before signing it. Custodial services introduce risks related to platform operations, account freezes, withdrawal rules, and other factors. Each approach entails different responsibilities.
Common Misconceptions
Uninstalling a wallet does not necessarily make the assets disappear; knowing a wallet address is not enough to regain control; and a change in an exchange’s internal balance does not necessarily correspond to an on-chain transfer.
What to Watch Out For
First determine who can sign transactions, how the account can be recovered, and what happens if the service becomes unavailable. Before using a wallet, verify the software’s source, and never enter recovery information on an unfamiliar website.
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