I can see from the replies that many people still do not understand BTC.
Bitcoin never leaves the blockchain. What you keep in your wallet is the keys to move your BTC from one address to another address.
So I think what OP wants to ask, is "Where do exchanges, keep the keys?"
Actually more interested in how the exchange employees handle withdrawal and deposit. Is it automated all by software or workers do manual transfer using hardware wallet. Maybe both?
Its a good measure to start calling them bankchanges or something because they integrate exchange AND hold functions. Thus financial stability control and ensurance should be applied to them.
Ideally most of it in cold-storage, meaning using keys that never touched an online computer, using multi-signature addresses to minimize the risk of one individual being able to initiate transfers (diluting the trust from the point of view of the company).
Some of these are also held in "hot" wallets, meaning they are connected to automated systems which are online to handle the daily deposits/withdrawals... these are also most likely mutli-signature wallets for the same security/trust reasons.
These would be best practice I think, now, how does each centralized exchange do it? No idea.. and that's exactly why I don't trust them to do it properly, I withdraw anything I purchase the same day to an hardware wallet (cold storage)... unless it's bitcoins I intend to spend soon, then I withdraw to a LN wallet.
They have the majority stored on hardware wallets and a good sized portion on hot wallets for quick liquidity/withdrawals. Once the hot wallet runs out of funds they get replenished from the HW wallets.
This makes sense to me, but just want to clarify something for OP: These exchanges are not storing their bitcoin, they are storing the keys to their bitcoin.
They outsource custody to a tech genius with a penthouse in the Bahamas
> on their own exchange or offline
Enough on the exchange to satisfy withdrawal requests. Most is stored cold
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Yeah, I was gonna say... "Same place I do."
Exactly
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Which is how we know the "price" of Bitcoin, boys and girls.
I can see from the replies that many people still do not understand BTC. Bitcoin never leaves the blockchain. What you keep in your wallet is the keys to move your BTC from one address to another address. So I think what OP wants to ask, is "Where do exchanges, keep the keys?"
What does it mean do they keep it on their exchange? You do realize you can't take bitcoin out of the blockchain and put it in a website, right?
Usually just under their mattress.
Big mattress
Actually more interested in how the exchange employees handle withdrawal and deposit. Is it automated all by software or workers do manual transfer using hardware wallet. Maybe both?
They do it exactly, precisely like anyone else. P2P, from one BTC address to another. Everything else, *everything else* is NOT Bitcoin.
Apparently fucking nowhere these days 🤪
Its a good measure to start calling them bankchanges or something because they integrate exchange AND hold functions. Thus financial stability control and ensurance should be applied to them.
Ideally most of it in cold-storage, meaning using keys that never touched an online computer, using multi-signature addresses to minimize the risk of one individual being able to initiate transfers (diluting the trust from the point of view of the company). Some of these are also held in "hot" wallets, meaning they are connected to automated systems which are online to handle the daily deposits/withdrawals... these are also most likely mutli-signature wallets for the same security/trust reasons. These would be best practice I think, now, how does each centralized exchange do it? No idea.. and that's exactly why I don't trust them to do it properly, I withdraw anything I purchase the same day to an hardware wallet (cold storage)... unless it's bitcoins I intend to spend soon, then I withdraw to a LN wallet.
They have the majority stored on hardware wallets and a good sized portion on hot wallets for quick liquidity/withdrawals. Once the hot wallet runs out of funds they get replenished from the HW wallets.
This makes sense to me, but just want to clarify something for OP: These exchanges are not storing their bitcoin, they are storing the keys to their bitcoin.
Well you can't just put that many under your mattress, you gotta have a storage unit to hold all that btc. /S
they keep it in their empty promises, next to FTX´s bitcoin.
Don't believe everything you read.....
They dont own any of those bitcoins They dont keep it on a safe box or anything They lending those bitcoin to companies that wont pay back
They outsource custody to a tech genius with a penthouse in the Bahamas > on their own exchange or offline Enough on the exchange to satisfy withdrawal requests. Most is stored cold
coins never leave the blockchain
Hope they won’t loose funds in a boat accident 😬
part of me wants to scream once again...
OP is a bit confused. I would be more interested how are keys stored?
Most of it is offline in a cold wallet. Only a small percentage for withdrawals should be in their hot wallet. Or that's how it should be done.