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What is the difference between Kraken Wallet and Kraken Exchange?

Kraken Exchange:

Kraken Exchange is a platform that facilitates the buying, selling, and trading of cryptocurrencies. It acts as an intermediary between buyers and sellers, providing a marketplace for clients to exchange digital assets. Kraken Exchange has full custody of the crypto assets on the platform.
We also offer the same services on our two mobile apps, Kraken and Kraken Pro.
Here are some key features of a crypto exchange:
  • Functionality: Kraken exchange focuses primarily on trading cryptocurrencies, providing features like order books, trading charts, and order matching algorithms.
  • Centralization: Kraken exchange is a centralized platform, meaning Kraken has control and custody of client funds. A deposit is required of assets onto the exchange before trading can occur.
  • Wide Variety of Cryptocurrencies: Kraken exchange supports a broad range of cryptocurrencies, allowing clients to access numerous digital assets in one place.
  • Liquidity: Exchange platforms typically have high trading volumes and liquidity.
  • Advanced Trading Features: Kraken exchange offers various trading options, such as market orders, limit orders, stop-loss orders, and margin trading and Futures trading enabling you to implement advanced trading strategies.

Kraken Wallet:

A Web3 wallet is a self-custodial wallet that enables you to securely manage your cryptocurrencies and interact with decentralized applications (dApps) on the Web3 ecosystem.
Here are some key features of a Web3 wallet:
  • Functionality: Web3 wallets primarily focus on providing a secure and user-controlled environment for managing digital assets and interacting with dApps.
  • Decentralization: Web3 wallets are designed to give you full control of your private keys (represented by your Secret Recovery Phrase) and assets, without relying on a central authority.
  • Enhanced Security: Web3 wallets prioritize security by ensuring you have sole ownership and control over your private keys, reducing the risk of hacks or theft associated with centralized exchanges.
  • User Privacy: Web3 wallets allow you to maintain their privacy since they are not required to share personal information or undergo KYC procedures to use them.
  • Interoperability: Web3 wallets can interact with multiple dApps and blockchain networks, providing you with broader access to decentralized applications and ecosystems.
  • Limited Trading Features: Kraken Wallet currently has limited trading capabilities compared to Kraken exchange, as its primary focus is on asset storage and decentralized application interactions. You can connect your wallet to a decentralized exchange (DEX) to swap tokens.
  • User Responsibility: With full control of private keys comes the responsibility of securely storing and managing them. If a user loses access to their private keys, it can result in permanent loss of funds. Kraken Wallet cannot recover your private keys for you.
  • Learning Curve: Web3 wallets and their associated tools require some familiarity with blockchain concepts, making them potentially more complex for beginners compared to centralized exchanges.
You should consider your specific needs, preferences, and security priorities when choosing between a crypto exchange website and a Web3 wallet.

Key differences you should be aware of:

Kraken Wallet is a self-custodial wallet, which means you have full ownership of your assets and private keys.
  • You are fully responsible for managing your private keys; this means saving your Secret Recovery Phrase in a secure place and NEVER sharing with a third party.
  • If someone gains access to your device and can access your Kraken Wallet app, then your assets and/or private keys are at risk. 
  • For more information, please refer to Backing up your wallet.
Your transactions with Kraken Wallet are executed on-chain. Once a transaction is confirmed, it is permanently recorded on the blockchain and cannot be reversed.
  • When sending crypto, take your time and verify the details. Always double check the wallet address and the send amount. If depositing to an exchange like Kraken, make sure the asset(s) and network(s) are supported.
  • On-chain transactions require paying a network fee. Network fees are not controlled or received by Kraken Wallet, and the fee amounts can fluctuate greatly during periods of high network activity.
  • Exercise caution when interacting with decentralized applications (dapps), as interacting with a malicious smart contract can result in a loss of funds.
Your Kraken Wallet provides access to many different types of decentralized applications (dapps), tokens and more. These new opportunities come with new risks.
  • Exercise caution when connecting your wallet to dapps or transacting. Interacting with a malicious smart contract can result in a loss of funds.
  • Educate yourself on common scams (e.g. phishing, rug pulls, ponzi schemes, giveaways). If it sounds too good to be true, it probably is.
  • Don't keep all your eggs in one basket. If you do intend to interact with dapps/Web3, consider creating more than 1 wallet and limiting how much you keep in your "Web3" (dapps) wallet.
    For example: if you collect NFTs you should consider having a "Minting" and/or "Trading" wallet, which you use to connect to dapps, and a "Hold" wallet that you transfer any valuable NFTs to.