Bitcoin Forum

Bitcoin users get Bitcoins by exchanging them for fiat at exchanges but where do the exchanges get bitcoins from ?

This question came to my mind after frequent cases of YoBit's Signature Campign wallet getting dry !

On exchange user1 trades bitcoin for money that user2 has. You do not trade WITH exchange....exchange is just a place where youers trade.

Exchanges that directly buy/sell from/to an user always buy low and sell high. Other exchanges just connect user's buy/sell call with that of another.

miners dump on exchange also, so they have coins from them, if you consider 1800 coins dumped per day this is a lot in just a single month, imagine one year

The exchange gets bitcoin from the fees they charge per buy and sell order in this case yobit charges 0.2% worth of fees even the percentage is low if you combine those fees itll gonna be big like the fee we use when we send btc.

exchange can control bitcoin price on their price movement,bitcoin price manipulated with profit purpose,not big different price,but its profitable,also they get profit from fees,imagine if every 1000 users taken fee 0.0002 each day,its big profit.

something like yobit buys bitcoin in first place from another exchanger so they have some initial bankroll to start then they start their service, at least they should do it this way.

then they have more bitcoin from what they earn through fees and what they hold from user's investments.

yobit goes dry because they are not managing things correctly and they don't have enough trades daily.

It takes a very substantial sum of money to launch an exchange. Marketing costs, beefing up security of the servers... It doesn't change things much to add the purchase of, say 50 BTC, from another exchange to begin operations.

Exchanges get Bitcoins by having people buy and sell on their site, or, if the site sells Bitcoin directly, chances are they buy it from other exchanges or also buy from their users, and take it and aim to sell it.

There is a lot of math and economic theories put into exchanges, and there are teams of people running them at all times.

Didn't that Tim Draper guy buy his silk road coins to kick off the funding for a new exchange somewhere?

i doubt that it is enough to have only 50 bitcoins for the very beginning of an exchange in my opinion because there might be people who would like to buy way more in the beginning

also the exchanges definitely buy their first bitcoins from other exchanges or just mine it for the start themselves though they most probably dont do that any more as mining isnt profitable

I believe exchanges mine bitcoins during the initial days of launch. Only after that exchanges multiplies with the trading services.

exchange get profit from fee of transaction and margin of trade altcoin and bitcoin,but so far i dont see yobit campaign wallet is dry,yobit have strong funds,they have so many users and also have dice game.

They don't. Most of the figures you see around the landing pages are only robots. My friend runs a pretty famous exchange and he said that to me. The exchange runs on coins stored by other members which are manipulated with varying rates and then the service charges. Most of the coins stored in exchanges are of the users and not the exchange itself.

They either already have mined them back when they're so easy to get, but mostly exchanges get BTC from sellers. They pay actual fiat for the seller's coins, with a commission, then they would sell it to the buyer.

Exchange deduct fee on each transaction taking place on their platform.Every time you sell,buy or withdraw your coins,they deduct a fee,thats how they get bitcoin.They also make profit due to the price difference

exchangers are a business just like any other business, so they need to have some kind of starting capital in the first place so they buy it somewhere and start with that. and from then on they will only survive on their investment (their exchanger is their investment) and earn through eachange and the fees.

i'm sure everyday they're buying and selling bitcoin as their service is exchanger, they have so many bitcoin as their stock and a ton of money also
and it's how you make an exchanger service

On the other end of the trade is another bitcoin user who wants to sell bitcoin, i thought this was basic economics   ???

I believe bitcoin exchange have some investor that backup the exchange with so many funds,and exchange give back that funds with profit from prce margin or fee of trading.

the Exchange is a place to do a deal that can be done by everyone. And exchanges have people who want to buy and sell well at the site of Bitcoin/all digital currencies. All such exchanges already exist in economic theory and some exist in a mathematical theory, so if you want to learn about the Exchange you can discuss it to economists in order to gain maximum knowledge and can start Exchange

I think they earn the coins by buying it from a miner, or maybe they mined it themselves. But I think, they probably buy it from someone.

My answer is going to be purely base on the visit I made to a local exchange office in where I'm residing: (From my discussion with the owner of the exchange)

Exchanges do have a mining farm in which (in my case, it was a small mining farm) they use it to fund their main addresses with and also have a backup option that they make contracts with some other miners in which they get an additional fee, whenever funds from their mining activities were used, for instance, the exchange I'm talking about, asked for 2% fee from everyone and they give 0.5% (additional fee) fee to miners (excluding the amount they exchange to fiat) whenever their addresses where used for an exchange transaction. Their (backup miners) limited to 6 month contracts.

Exchanger works in both way and called trading that mean one person will sell bitcoin for fiat and another buy that bitcoin for his fiat and exchanger take some of those coin as fee.

So quite confused about what is your actual question. ???

Exchanges a good one only a places where customers do exchange. One customer has fiat, another one has Bitcoin, each has a exchange rate in mind, when they match, then there is a trade. It is exchzngd's job to bring these two persons together.
Exchange also act like a escrow, when a user says he has 5k Bitcoin for sale, the user has to transfer the Bitcoin to exchange's account. This way exchange make sure when price agree upon, always a trade. This is still user's bitcoin，but exchange can transfer the coins to personally account, and claim being hacked etc.like gox.

Exactly. Most of the coins they hold or not theirs. So what we have seen in the past exchanges getting hacked. Were just excuses to run away with investors money.
If you will use an exchange, double check if they can be trusted.

On the other hand while you buy some coins, somewhere someone else will sell his coins. OR they'll get some bitcoins by mining. OR they (may be the owner of that exchange website) might  get some bitcoins by some local traders and he hold it until he open an exchange?

Nah most of the time the owners hold a small leverage for high withdrawals but overall they start with less capital and user deposits start to grow Until they got enough leverage to payout perhaps 80% of the funds in case of an emergeny.

I would imagine places like wesellcrypto and Circle buy their own, maybe on other exchanges.   Not sure about coinbase.  Other exchanges just get it from customer trades, as others have said.

At exchanges a lot of people are selling and buying bitcoins and other currencies for their businesses and other usage etc, and with this the exchanges have their fees and other cut up at there, so in this way they get some bitcoins by providing us the service.

These are from exchange fees that are imposed on users. Yobit offer trades with a 0.2% both way fee.
Some sites like YObit also act basically as an escrow service as a iddle man of two transactions.

Every exchange is different. While some have users placing a buy and sell order (example Localbitcoins), other individual exchange websites get bitcoins by trading themselves and other big exchange websites like virwox might be getting coins from big traders as they buy in bulk. Sometimes they too run out of coins and hence they delay the withdrawals (Eg: Payza).

Yes, at there you buy a currency when someone sell it , it is not directly available at the exchange, but still there are some exchanges where you do exchange with the exchanger, at there the exchanger get bitcoin when someone sell it or they buy bitcoin to availthe service for their members.

Exchanges are peer to peer platforms where users exchange fiat for Bitcoin and vice versa. I don't think the Bitcoin exchanges need a lot of backing up by investors and a big starting capital to operate because everything is being deposited and withdrawn by the users and the exchanges are only profiting from the withdrawal fees.

I suppose they get Bitcoins from user fees and perhaps some altcoin selling to users too (if the exchange does mine). Probably some do mine too.

Most exchanges just connect people who have coins for sale with buyers. They facilitate the trade and may not require many coins themselves.

where do exchange get Bitcoins?
most of the exchanges get their bitcoin on every transaction who join in the
exchange flatform whether there gonna buy or sell Bitcoins. ;)

Most likely the exchanges buy their bitcoins and then they get some earning from the exchange transactions usually. I think the most part of the exchangers use this method nowadays.

I think they get an initial amount from some private/public investors and some from their own pockets.

After that, they earn from transaction fees from the site. Some have fee-per-trade, some have withdrawal fees, etc. You know what I mean.

Probably from bigtime miners who invest on bitcoin startups such as exchanges and also probably from owners of established btc startups who wanted ti extend their funds to other ventures.😄

I think about it either. I even saw my friend sells the other's bitcoin and then the money is given by the third people who wants to buy bitcoin. so the second people send his bitcoin to the third people. exchanges just connects buyer and seller.

Basically, exchangers get their coins from either miners, traders, contacts, etc. They can just ring up people and buy from them whenever they run low on bitcoin inventory. They have some sort of a wallet/s to check whether their bitcoins needs restocking or immediate selling.

Very simple !! Do you know exchanges charge fees for every trade ?
Every exchanges have a fees for every trade. Just think how much trade happens in a single days. Also they earn from the transaction fees like sending btc in bulk free of transaction fees and get fees from individuals transaction. Hope you can understand now where do the exchanges get bitcoins. :)