Question 1

Where do exchanges get their Bitcoin?

Accepted Answer

Crypto exchange operators acquire Bitcoin from BTC miners. The participants in the Bitcoin network earn rewards and transaction fees in crypto, so they’re the ultimate source of this asset. Some Bitcoin currency exchange operators actively engage in mining themselves.

Question 2

How do Bitcoin exchanges make money?

Accepted Answer

Cryptocurrency exchange operators depend on different revenue streams. They often monetize their platforms by charging users for deposits, withdrawals, transactions. Some Bitcoin exchanges work with crowdfunding, while others use their website to promote brands through sponsored advertising.Altcoin and Bitcoin market making is another viable revenue source for cryptocurrency exchange operators. Market makers actively buy and sell crypto assets to inflate liquidity. They also narrow the spread (the gap between the highest bid and the lowest ask) and help investors close trades more seamlessly.Lastly, some exchange operators like Binance are expanding into mining. If you know how to protect yourself from cryptojacking malware, you may use their platforms to earn cryptos organically.

Question 3

Can I buy Bitcoin on one exchange and sell on another?

Accepted Answer

Yes, you can. Doing so enables you to capitalize on the bitcoin price differences across exchanges. This strategy is called arbitrage. The difference between the trading prices allows you to increase your holdings or make more profits.

Question 4

Can Bitcoin be exchanged for real money?

Accepted Answer

Yes, most platforms let you exchange USD to bitcoin and support crypto-to-fiat conversion. But what is a bitcoin exchange, and how do bitcoin exchanges work? We explain the ins and outs in the article above.