How do exchanges with many different coins work?

[sleepless]

Hello,

I'm trying to understand exchanges. How do exchanges like cryptsy with so many different coins work?
Do they have one wallet for every coin? Are then all wallets on one server? How do they secure them?

It's not like I'm trying to make a new exchange but it interests me so I hope anyone can help here.

Thanks very much in advance!

[Satyre_Noir]

Interesting subject, I would like to know more too.

[empoweoqwj]

Hello,

I'm trying to understand only exchanges. How do exchanges like cryptsy with so many different coins work?
Do they have one wallet for every coin? Are then all wallets on one server? How do they secure them?

It's not like I'm trying to make a new exchange but it interests me so I hope anyone can help here.

Thanks very much in advance!

It varies from exchange to exchange. You would need to ask each exchange their security policies.

[simbo]

My guess:

1. The exchange have 1 central wallet for each coin.
2. Once you sign up & deposited, the coins goes into the central wallet for that coin, & your account is updated.
3. When trading, only records in account is updated, no real coin movement.
4. When you withdraw, the coins is transfer from the central wallet to your wallet.

Regards.

[sleepless]

Okay, seems legit. Thank you.

So they really need one wallet for each coin. Seems a bit complicated with so many different coins.
But you're right. How else should it work...

I was asking becauce I couldn't imagine that they really have so many wallets

[empoweoqwj]

Okay, seems legit. Thank you.

So they really need one wallet for each coin. Seems a bit complicated with so many different coins.
But you're right. How else should it work...

I was asking becauce I couldn't imagine that they really have so many wallets

He did say he was guessing though

[sleepless]

Okay, seems legit. Thank you.

So they really need one wallet for each coin. Seems a bit complicated with so many different coins.
But you're right. How else should it work...

I was asking becauce I couldn't imagine that they really have so many wallets

He did say he was guessing though

Yes, you are right. But seriously, how else should it work? I think every coin needs an own wallet, isn't it so?

[empoweoqwj]

Okay, seems legit. Thank you.

So they really need one wallet for each coin. Seems a bit complicated with so many different coins.
But you're right. How else should it work...

I was asking becauce I couldn't imagine that they really have so many wallets

He did say he was guessing though

Yes, you are right. But seriously, how else should it work? I think every coin needs an own wallet, isn't it so?

It certainly seems like a sensible solution. But there are always alternatives. If in doubt, don't guess, ask people who actually know.

[simbo]

My guess:

Let say, for bter, they accepts various coins & RMB, then they will need a bank account in RMB & central wallet for each coin to accepts & pay out.

For security reason, the central wallet is very unlikely to be on the front end server.

For receipts & pay out of coins & RMB, it could be manually executed by a person, on a computer totally not link to the front end server.

Regards.

Update: Bter create a wallet of every coin for every client. That is a lot of wallets, not sure how scalable is their model.

[bitpop]

Some may build their own like ufasoft
And for security each wallet is on a segregated machine

[empoweoqwj]

My guess:

Let say, for bter, they accepts various coins & RMB, then they will need a bank account in RMB & central wallet for each coin to accepts & pay out.

For security reason, the central wallet is very unlikely to be on the front end server.

For receipts & pay out of coins & RMB, it could be manually executed by a person, on a computer totally not link to the front end server.

Regards.

Update: Bter create a wallet of every coin for every client. That is a lot of wallets, not sure how scalable is their model.

Not sure why we are talking about RMB now .....

[bitpop]

Hes from China duh

[MGUK]

Accounts can help with this stuff, saves having multiple wallets for each coin if you really want to handle your accounting on that level:

https://en.bitcoin.it/wiki/Accounts_explained

Using accounts probably makes auditing a bit easier (e.g. you can audit the accounts without needing the database server which maintains website accounts)

[Abdussamad]

Accounts can help with this stuff, saves having multiple wallets for each coin if you really want to handle your accounting on that level:

https://en.bitcoin.it/wiki/Accounts_explained

Using accounts probably makes auditing a bit easier (e.g. you can audit the accounts without needing the database server which maintains website accounts)

Accounts are a total joke. See

The sendfrom method sends coins and debits the specified account. It does **not** change Bitcoin's algorithm for selecting which coins in the wallet are sent-- you should think of the coins in the wallet as being mixed together when they are received. There is no way to ask Bitcoin to "create a payment transaction using the coins received from these previously received transactions" without using the raw transactions API(which is not part of the account system.)

What does the above mean in practice? It means you can have an account with a negative balance! There is no isolation of the different accounts at all!

[kokojie]

They have a VM for each type of coin, just 1 wallet on each VM, need about 5 physical servers to accommodate 50 coins or more.

They only touch the wallet for deposit/withdrawal. All other trades happen in database. They may even set up cold storage for each coin, and only have like a 10% hot wallet.

[MrBr1ghtSide]

My guess:

1. The exchange have 1 central wallet for each coin.
2. Once you sign up & deposited, the coins goes into the central wallet for that coin, & your account is updated.
3. When trading, only records in account is updated, no real coin movement.
4. When you withdraw, the coins is transfer from the central wallet to your wallet.

Regards.

1) Untrue, at least with cryptsy. (Read 2)
2) when you deposit for example bitcoins, you have to create your own private deposit address at cryptsy. When you check the account balance of your deposit address using any block explorer, you see your balance which means the coins aren't moved to a central wallet.
3) this is ofcourse true
4) coins are sent from your deposit address as you can see in the transaction history

[simbo]

My guess:

1. The exchange have 1 central wallet for each coin.
2. Once you sign up & deposited, the coins goes into the central wallet for that coin, & your account is updated.
3. When trading, only records in account is updated, no real coin movement.
4. When you withdraw, the coins is transfer from the central wallet to your wallet.

Regards.

1) Untrue, at least with cryptsy. (Read 2)
2) when you deposit for example bitcoins, you have to create your own private deposit address at cryptsy. When you check the account balance of your deposit address using any block explorer, you see your balance which means the coins aren't moved to a central wallet.
3) this is ofcourse true
4) coins are sent from your deposit address as you can see in the transaction history

My guesses is based on how a forex exchange worked. Not sure how cryptsy works. Bter creates an address for every type of traded coin, for every account. Highly not cost efficient.

Regards.