Where do coins actually go, when cashed in?

[BittBurger]

Extreme newbie question here:

Say a dude has $11,000,000 worth of coins (25,000 coins).

And he sells.

Where does all that wealth get moved to inside the Bitcoin system?

It all goes into the coffers of the exchanges, doesn't it?

Therefore, aren't the exchanges ultimately going to be the central banks of Bitcoin?

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If Bitcoin could disperse into a huge "sea" of love ... then it would truly be decentralized wouldn't it?  

Shouldn't there be a central, owned-by-nobody, exchange?

A huge vast ocean of bitcoins that constantly grows, but is controlled by nobody?

You sell it, and it goes back into the "global pool" of coins ...

But that isn't the case.  Someone is always holding the funds.

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Should Satoshi have created a Bitcoin "pool", rather than require that coins be held by someone at all times?

[silvergoldandbitcoin]

Ok so this guy sells all of his bitcoin, thus "cashing out". But he sold them for what? USD? EUR?

That money had to come from somewhere. Satoshi gave us bitcoin, and we collectively give bitcoin value based on our bids on the exchanges.

Exchanges might act as temporary storage of funds, but they should never be used to hold your bitcoin for any significant period of time. Online wallets as a whole shouldn't have a significant amount of bitcoin in them either.

[Lethn]

You don't seem to understand how trading, exchanges or currencies actually work, either that or you're trying to bait me O_O.

The wealth the seller has will just be in dollars, but bear in mind, if he has sold those coins, then someone else has successfully bought them, when you trade anything there is always a buyer and a seller and that is exactly the same thing with currencies, as for wealth, that can only get transferred to different places and wealth is transferred to different commodities or currencies that people think have value. It would also be impossible to have a central bank that is owned by nobody.

[beetcoin]

the blockchain is the actual "bank" that decides "so and so" person owns this bitcoin. the exchanges are just.. exchanges. as in they provide people to buy or sell coins, but not who owns what coins. who owns the coins is based on whether you have the wallet information or not.

[BitcoinBarrel]

If somebody sells their Bitcoins for cash then the person who pays the cash gets the Bitcoins.

[BittBurger]

You don't seem to understand how trading, exchanges or currencies actually work, either that or you're trying to bait me O_O.

Sorry no.  I'm just a little retarded when it comes to numbers.  Okay very retarded. 

Thanks for the explanation.