Over the years, there has been an advancement in the modes of payment and storage of money. Each method of financial movement has its respective features. A wallet and a bank account are two well-known options for storing and making payments available to the general public. While the two may seem similar, a wallet and a bank account vary on several grounds.
Wallet vs Bank Account
The main difference between a wallet and a bank account is that a wallet stores cryptocurrencies like Bitcoin, Dash, and Ethereum. On the other hand, a bank account stores fiat money, including rupees, dollars, euros, pesos and so on. The numbers and letters in a wallet are unlimited. In contrast, the numbers in a bank account are limited, usually up to 20 digits only.
A wallet stores the private keys of an individual that provide him access to his cryptocurrency. A digital wallet has been a recent introduction to ease financial transactions. A primary purpose of wallets is to allow users to send, receive, and exchange a wide variety of cryptocurrencies with other consumers. It is important to keep the crypto wallet safe because once the private key is lost, the individual loses access to his money.
A bank account is a financial agreement between a client and the bank that controls the exchange, deposits, and management of fiat money. Fiat money can take the form of many currencies including dollars, pesos, rupees, and euros. Common types of bank accounts are Deposit accounts, Transactional accounts, savings accounts, and loan accounts.
Comparison Table Between Wallet and Bank Account
| Parameters of Comparison | Wallet | Bank Account |
| Purpose | The main purpose of a wallet is to store cryptocurrencies and operate with them. | The main purpose of a bank account is to store and operate fiat money. |
| Composition | A wallet generally consists of numbers and letters. | A bank account consists of limited numbers. |
| Control | The user has complete control over stored currencies. | The user may require authorization from their respective bank to carry out certain transactions. |
| Access | A wallet can usually be accessed via websites or applications with a robust Internet connection. | A bank account can be accessed via online banking. |
| Security | The level of security is more robust than that in a bank account. | The level of security is less robust than that in a bank account. |
What is a Wallet?
A wallet refers to software whose main function is to store cryptocurrencies. A wallet generally includes both private and public keys which go together. A wallet assists users to send and receiving cryptocurrencies through the Blockchain. Cryptocurrencies such as Ethereum, Bitcoin, Dash along with any other currency the wallet allows are stored in a wallet.
The public and private keys found in a wallet are usually represented in a separate WIF wallet import format. This representation usually consists of letters and numbers. A digital wallet provides the user with complete control over their cryptocurrency. In other words, users have the liberty to carry out any and every transaction without requiring any third party authorisation.
Restrictions of territory are non-existent in digital wallets. The private key that accompanies a wallet is the only medium of accessing the money stored within it. If the user loses the private key, the money is also lost. While such a system of financial security may seem less flexible, it offers a high level of security to the users.
There are many forms of digital wallets available to users. The main types of digital wallet options available to users are paper wallets, hardware wallets, and online wallets. The most immediate function of a digital or crypto wallet is to keep the private keys of the user safe and secure. Therefore, a digital wallet offers several features to its users.
What is a Bank Account?
A Bank Account refers to a financial account. The usual responsibility of a bank account is accorded to a bank or other financial institution. Every bank sets its own rules and regulations for its respective bank account. An individual may choose to have more than one bank account. There are several types of accounts, including deposit accounts, current accounts, savings accounts, and credit card accounts.
Storing money in a bank account generally offers lucrative features to the account holders. The account holders usually earn interest when a specific amount of money is held with the bank. Today, most banks offer online banking options to their users. However, while some accounts call for a minimum balance requirement, others may have a no minimum balance requirement.
Many credit card rewards are offered to account holders as well. The prominent merit of bank accounts is that they offer ease and convenience to users. The account holder’s money is protected from fraud and theft. In addition, the account holder is promised his money bank in case of the closure of the bank in which he has the account.
Banks generally offer low cost or free of cost services to account holders. Users can access credit from the ease of their homes. A deposit account is the most common account held by individuals. While such an account serves as an asset to the account holder, a deposit account is a liability to the bank. The name of financial accounts differs in each bank.
Main Differences Between Wallet and Bank Account
- A wallet is a more convenient source of storing money as compared to a bank account.
- A wallet is usually represented in a separate WIF wallet import format. In contrast, a bank account is represented with the bank name, branch, and type of account.
- No authorization is necessary to conduct transactions via a wallet. On the other hand, some bank account transactions may call for permission from the account holder’s bank.
- A wallet is accessible even on holidays and in different territories. Information regarding a bank account may not be accessible on particular holidays or in different territories.
- The withdrawal methods of a wallet offer less flexibility than those of a bank account.
Conclusion
Therefore, it is evident that there are distinctions between a wallet and a bank account. While wallets are a recent addition, bank accounts have been an indispensable mode of financial movement for ages.
A wallet, being a technological innovation, may be harder for some individuals to understand. In contrast, every other individual in society has a valid bank account today. Thus, although both a wallet and a bank account serve as modes of financial transactions, they are not identical in functioning and uses.
References
- https://blog.mercury.cash/2019/11/19/4-differences-between-a-wallet-and-a-bank-account/#:~:text=A%20wallet%20is%20made%20to,%2C%20dollars%2C%20pesos%2C%20etc.
- https://en.wikipedia.org/wiki/Bank_account