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Exchanges don't keep a real BTC wallet for each user. When one Coinbase user sends funds to another, the transaction is entirely virtual (which lets them avoid
by apk-d 9y ago
Exchanges don't keep a real BTC wallet for each user. When one Coinbase user sends funds to another, the transaction is entirely virtual (which lets them avoid paying the network transaction fee).
- jncraton 9y agoI'm aware of this, but they should still have enough BTC in storage to cover the BTC in all accounts. This means they should also have BCC for each user.
- jdmichal 9y agoThat's an assumption that may or may not be true. Is there any reason why Coinbase could not be operating on a fractional reserve? Or, if we want to consider Coinbase as managing a discrete asset instead of managing deposits... Shorting stocks "loans" out a stock that technically belongs to someone else; there two "positive owners" and one "negative owner" until the position is covered. So they can also operate on a fractional reserve.
- jncraton 9y agoYou are correct. However, Coinbase does state that they simply store the funds: "Customer deposits are not sent anywhere. Unlike other financial institutions, we do not lend out customer funds. 100% of your funds are securely stored." https://support.coinbase.com/customer/portal/articles/667213-does-coinbase-use-customer-deposits-for-anything- https://support.coinbase.com/customer/portal/articles/667213...