In the old movies you can sometimes see people robbing houses or banks and instead of taking money bills they'd bag these bigger pieces of paper, the size of a large postcard. Those were stocks or bonds in the paper form, called certificates. I don't think they exist anymore. Maybe there are still companies that issue them, but it's more of a commemorative gift, or something given to large investors as a gift from the broker, or a company. Nowadays you do everything online. You open a brokerage account, or in case of bonds you can buy them on the government's website. They stay there on the account, you don't "take them out" the way you move bitcoin around.
This is done to prevent thefts like the ones from the movies where if they took your certificates you'd be left with nothing. Now the broker has your name and address and all the other details and if you lose access to your account you can recover it pretty much the same way you recover your mailbox, or a Netflix account.
Yes, the numbers provided by CEX could be fake and they could be insolvent. FTX was and so was MtGox. You don't know if they have the money which is why people recommend users to do their trades and withdraw. Don't treat CEX like a wallet.
Topic: What if CEX do not have BTCs? What is being traded then? - page 2. (Read 197 times)
The other day I was thinking about trading and trading platforms. Because I am new to the field, I might not understand certain things you guys might already know.
For example, when you buy a stock, say AAPL, how do you get out your AAPL from the exchange? In case of BTC you can send it to the hard wallet and then keep it there. Then I thought ok, probably buying a stock is just a record on a book. You never will see the physical stock (piece of paper). But then what if the exchange never had that stock?
And projecting this thought to the crypto exchanges, what if some well known CEX do not have enough BTCs that is being traded on that exchange? All that numbers and volume could be fake. Then the CEX is becoming like a traditional bank, where unless everyone will want to withdraw their BTCs, they are ok trading non existing BTCs.
well, what do you think?
For example, when you buy a stock, say AAPL, how do you get out your AAPL from the exchange? In case of BTC you can send it to the hard wallet and then keep it there. Then I thought ok, probably buying a stock is just a record on a book. You never will see the physical stock (piece of paper). But then what if the exchange never had that stock?
And projecting this thought to the crypto exchanges, what if some well known CEX do not have enough BTCs that is being traded on that exchange? All that numbers and volume could be fake. Then the CEX is becoming like a traditional bank, where unless everyone will want to withdraw their BTCs, they are ok trading non existing BTCs.
well, what do you think?
Jump to: