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I did searched on how the crypto exchange works, However I do not find the exact answer to my questions.

Let's assume we are talking about two exchanges - Exchange A - USA based, local (i.e. users kyc based on US identity card like SSN). Exchange B - Indian based, (i.e. users kyc based on indian identity card like Adhaar)

So Exchange A will have only US users and B will have only Indian users. Now if US people are believing that bitcoin price will rise and purchase a lot of bitcoin and price increases by some %, how it will affect the price in exchange B? As 90% of Exchange B users will be sleeping and will not know that price on exchange A is increasing, how it will relate?

Will any user on Exchange B ever be able to purchase bitcoin from any user of exchange A??

The above scenario also make me question how will the very first user of exchange B will buy and from whom will it buy the bitcoin

Edit --- As one of the answer suggested that Binance.com accepts, I know about binance. My question is not understood properly here.

Let's take example of newly formed exchange, and exchanges here in India, which accepts only Indian ID card.

How price increase at bianance will affect price at some less known new local exchange?

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Your base assumption that exchanges only accept local identities is false. Most accept traders from around the world.

Take Binance.com for instance, which is based in China with servers in South Korea\Japan, and they accept international IDs when you verify your account.

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  • in general your statement is correct. no one can really prevent that someone buys btc at exchange A and sells it at exchange B. but i think "... a major exchange that doesn't accept a U.S. ID. ..." this statement is wrong caused by special laws of the usa. so usa-citizen may have a special position for cryptoexchanges (see bitfinex.com/posts/227 for example. bitfinex is one of the biggest exchanges)
    – anion
    Jan 2, 2018 at 13:27
  • @anion Good call. I didn't realize Bitfinex gave the U.S. the boot. I'm updating my answer accordingly.
    – K Paul
    Jan 2, 2018 at 17:07
  • You are correct for the big exchanges @KPaul, But here I am talking about new exchanges like we have amy exchanges in India, which only accept Indian ID cards, I want to know, How these exchanges will work? And even if for example Binance.com have users from around the world, how prices from there will affect prices on less known new exchanges.
    – Sanuj
    Jan 3, 2018 at 6:56
  • @Sanuj, those smaller local exchanges may vary some from the large exchanges, but in the end, people aren't oblivious to what the price is elsewhere. It's not like I would sell my Bitcoin on X small exchange for only $5,000 when I know everyone else is getting $14,000. So the fact that the bigger exchanges are used by people all over the world means that the users on smaller exchanges probably will want to buy or sell within 5% of what's happening on larger exchanges. Give or take. When the price swings a lot in one day, you may see a larger delta temporarily as everyone catches up.
    – K Paul
    Jan 3, 2018 at 23:23

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