I'm trying to understand the topic of blockchain and bitcoins as well. So, the only one question I want to get answer for: how do exchanges commit orders? I mean, how the transaction could be started by exchange? As I understand, only the owner of wallet (with the pair of pub/private key) can start transaction for transferring some amount of btc. So, I can't find the information about "remote control" of wallet. Maybe I am wrong, please correct me. And excuse me for my English. It's not my native language.
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Are you interested in orders on an exchange (which never reach the Bitcoin blockchain) or withdrawals/deposits into an exchange (which are recorded on the Bitcoin blockchain) ?– Nick ODellMar 10, 2017 at 20:13
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I'm interested in the way how the exchange handles the user's wallet. I have some spaces in knowleges about work of exchange. So I want to know what happens when the exchange closes my order and about the flow of btc from one wallet to another.– jahraMar 10, 2017 at 20:26
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Does exchange work directly with my wallet or I have to make deposit/withdraw to exchange account?– jahraMar 10, 2017 at 20:31
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1 Answer
In general, if an exchange wants to execute a buy or sell order without asking you, the relevant Bitcoins need to be held by an address that the exchange controls. When an order executes, and Bitcoins change hands, nothing changes on the blockchain. The only thing that changes is a record internal to the exchange. It's only when you withdraw the money from the exchange that anything changes on the blockchain.
answered Mar 10, 2017 at 20:34
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Thanks for response! As I understood, the flow is something like: I deposit bitcoins to a wallet controled by exchage (transaction is added to blockchain) In a case of order execution no new transactions are opened in blockchain, but updates the value of btc on my account. And a transaction is opened when I withdraw btc back to my wallet. Is it correct?– jahraMar 10, 2017 at 20:45
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