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If you send me bitcoin in exchange for a widget, I'm eventually going to want to spend that bitcoin and I may not be doing that on the Visa network. At some po

If you send me bitcoin in exchange for a widget, I'm eventually going to want to spend that bitcoin and I may not be doing that on the Visa network. At some point they have to offload those transactions back to the blockchain so the coins can actually get to my wallet. If they go the DB route as you suggest, they would basically be creating Visa Bucks, backed by bitcoin (which they'd have to buy), that can only be spent on the Visa network.

PragmaticPulp 6y ago
> At some point they have to offload those transactions back to the blockchain so the coins can actually get to my wallet. The vast majority of Bitcoin exchange participants choose to keep their coins in the exchange, not their own personal wallet. > If they go the DB route as you suggest, they would basically be creating Visa Bucks, backed by bitcoin (which they'd have to buy), that can only be spent on the Visa network. Every exchange uses a DB backend. They only engage with the blockchain when someone performs a withdrawal to another institution that they don't have an agreement with, such as when you withdraw to your wallet. And you will pay the transaction fees for that blockchain interaction ($8+ currently). If you're not paying transaction fees for other operations on their platform, it's clearly not touching the blockchain. Every exchange operates this way. It isn't a new concept.