If i buy bitcoin where does the money go

But you can get burned assuming it will keep skyrocketing. She was in good company. Related 4.

By using our site, you acknowledge that you have read and understand our Cookie PolicyPrivacy Policyand our Terms of Service. This question seems to me to be such an obvious question, that it must be answered. As I understand it is necessary to buy bitcoins using dollars or some other currency. Where do those dollars. The money goes to the party that sold it to you — that party owned the bottle before you owned it. You might be able to trace ownership of that bottle all the way back through the supply chain, to the point at which it was manufactured.

What is happening?

Jump to. Sections of this page. Accessibility help. Email or Phone Password Forgotten account? Sign Up. Ever wonder where your money goes when you buy Bitcoin?

Why Bitcoin is Gaining Traction

By using our site, you acknowledge that you have read and understand our Cookie PolicyPrivacy Policyand our Terms of Service. This question seems to me to be such an obvious question, that it must be answered.

As I understand it is necessary to buy bitcoins using dollars or some other currency. Where do those dollars. The money goes to the party that sold it to you — that party owned the bottle before you owned it.

You might be moneu to trace ownership of that bottle all the way back through the supply chain, to the point at which it was manufactured. It probably had several prior owners before you got it. If you purchase from a market exchange like Mt. Goxhere’s how that works.

Gox, like most market exchanges, operates using deposit accounts. To sell 10 bitcoins you must have deposited 10 BTC to your account with the exchange. Then when you withdraw your BTCs, the exchange will send that amount of bitcoins from the exchange’s monej to yours. When the seller withdraws the USDs or whatever currency the coins were sold forthe exchange will send those funds.

This generally occurs through the banking system, with the funds eventually arriving in the seller’s bank account. There are other types of bitcoin sellers — direct sellers, who have an inventory of bitcoins that they purchased previously, or will make a trade behind the scenes ths be able to deliver your order.

So the dollars from your purchase goes to them in exchange for the bitcoins they owned. Then there are other types of trades which involve if i buy bitcoin where does the money go. These include financial derivatives where you may speculate on bitcoins using cash but until you actually withdraw those bitcoins to your own wallet, you only own a claim against those bitcoins or against a financial position iif bitcoins.

But that is an example where there is not a simple buying if i buy bitcoin where does the money go selling of bitcions at a certain price. Now every bitcoin in existence originated from mining. Mined coins arrive 50 at a time about once every ten minutes. They are earned by a mining operator or mining pool and distributed to the mining operators who were mining.

To mine, one must buy expensive hardware, expend the effort to build and operate the equipment, and purchase the electricity expended during mining. The mining operators can then deposit their bitcoin proceeds to an exchange to sell them and receive cash in exchange. It’s like when you buy anything. When you trade your dollars for somebody else’s eggs, you get the other person’s eggs, and they get your dollars.

Mone can then sell the eggs to somebody else if you like — then you get their dollars, and they get your eggs. If you are able to sell your eggs for more than you paid for them, you make a profit. Instead of buying eggs, it is possible to mine them using a device commonly known as a ‘hen’.

Hens make eggs out of thin air, and are effectively a license to print money since the eggs they make can be traded for dollars. They do ehere fuel to run, which costs money. Miners need to determine whether their earnings from mining eggs is enough to offset the fuel costs. Unlike eggs, however, there is a fixed limit of 21 million bitcoins that will ever be created, which makes them relatively scarce, and helps give them value.

Home Questions Tags Users Unanswered. Where do the dollars go? Ask Question. Asked 7 years, 4 months ago. Active 2 years, 6 months ago. Viewed 40k times. When you buy a bottle of soda at the convenience store, where does the bitcion go? Bitcoins are like a commodity that works the same way. Stephen Gornick Stephen Gornick So in the case of an exchange like Coinbase, do they hold a «pool» of Bitcoin that they hold and sell to people?

Chris Moore Chris Moore 14k 5 5 gold badges 56 56 silver badges 81 81 bronze badges. Heh, this is a great way of explaining it! Chris How does this work in the case of exchanges like Coinbase?

Directly to people who are currently selling if you don’t count the minor exchange fees. Featured on Meta. Update: an agreement with Monica Cellio. Linked 0. Related 4. Hot Network Questions. Question feed. Bitcoin Stack Exchange works best with JavaScript enabled.

HOW TO BUY BITCOIN 2019 — Easy Ways to Invest In Cryptocurrency For Beginners!

So in the case of an exchange like Coinbase, do they hold a «pool» of Bitcoin that they hold and sell to people? Investing in bitcoin may seem scary, but know that it takes time and effort to understand how Bitcoin works. Bitcoins should only be kept in wallets that you control. There is a limited amount of gold on earth. NextAdvisor Paid Partner. Heh, this is a great way of explaining it!