Hello everyone,
I just started the Academy, learning a lot. I got a question that I couldn’t find the answer to, so I made a new topic here. I was thinking about how Crypto trading works. How are trades made on an exchange? For example if you exchange with someone 1 BTC for some ALTs, is that trade like a normal transaction? Is this trade visible on the blockchain or is this made just on exchange.
Thank you!
Trades on a centralized exchanges are controlled by one party and when 2 users agree on a buy and sell price the order will be executed.
If we are talking about a centralized exchange, then it won’t be visible on the blockchain but rather in their centralized database system. No one except you and the exchange should have the history of the transcations.
Trades on a decentralized exchanges also wait for both parties to agree, but here the buy or sell order will be executed directly on the blockchain without the need of a third party.
If we are talking about a decentralized exchange, then it will be visible on the blockchain by everyone.
Example of a centralized exchange: Binance
Example of a decentralized exchange= 1inchexchange
But how is that order executed so fast that btc is instantly transfered to the other traders account without making a transaction with inptuts and outpus? Are accounts on exchanges different?
I am wondering about centralized exchange.
Sry for the late reply. A centralized exchange just makes an entry, that you own now this much btc. It does not have to happen on chain. This is bad, because you don’t really own the bitcoin unless you withdraw it to your own personal wallet that you control the private key of. That’s why it happens so fast. Hope this helps you understand it better now. 