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Author Topic: Virtual bitcoin in Centralized Exchanges  (Read 11 times)
tesla80
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May 04, 2018, 10:05:48 PM
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Hello,

As all you know, people deposit their fiat money (USD) to centralized exchanges such as Binance, Kucoin etc to buy Bitcoin or Altcoins.

So, there are 17 million BTC currently AFAIK.

What if, really big money enters into market and wants to buy BTC.

I mean, they can buy more than existing BTC, I think. Because centralized exchange is not directly connected to the blockchain all the time.
They just create some assets internally and allow trading on them, only when users want to withdraw the coins, exchange connects to the blockchain.

Finally, it seems possible that centralized exchanges can "create" non-existing assets (Bitcoin, Altcoins, even USDT) internally as much as requested by users coming with fiat money.

Decentralized exchanges cannot do this since they are directly connected to the blockchain.

Is there a mistake in my thoughts?

What do you think, is it possible or not?
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Tankdestroyer
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May 04, 2018, 10:59:54 PM
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Is there a mistake in my thoughts?
They can create assets internally in their exchange and allow trading on them, but even if people did trade those coins(bitcoins or altcoins), they wouldn't be able to withdraw those coins since exchanges cannot create coins in their real wallet out of the thin air, making those who traded it unable to withdraw those coins(since it doesn't exist in the blockchain). For this reason centralized exchanges might want to avoid doing it.
What do you think, is it possible or not?
It is possible but those exchange that will attempt to do it will have the intent to scam people for real.
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