How do exchanges acquire BTC?

[bitcoinrocks]

I was thinking about what sort of plan (coin?) someone might come up with for getting around a government ban on fiat->BTC transfer and I realized I don't know how an exchange *actually* acquires the BTC that they transfer to you in exchange for fiat.  How is that done?

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[matt608]

Exchanges don't acquire btc, they provide a platform for people to buy and sell each other btc/fiat.  I.e. people who want to sell BTC deposit it on an exchange.

[justusranvier]

People deposit BTC there, and create limit orders to fill up the order book just like how you deposit fiat there and create your own orders.

A new exchange uses BTC supplied by its owner/investors to seed the initial order book.

[bitcoinrocks]

So the actual supply of BTC comes from the miners originally?

[justusranvier]

Mining is the only way in which bitcoins come into existence.

Before any exchanges were ever formed, a considerable amount was already in circulation between miners and early adopters.

OTC trading started well before any orderbook-based exchange got started.

[Doublelucky]

Where do exchanges sell their BTC (fees) for fiat?