Loading ...“When you cut a check, or wire the money, or deposit the money, WHO gets the money? Where does it go?”
It’s a cash market between two individuals, or with an exchange.
Two Scenarios:
1.) Dealing with an individual who offers to sell a bitcoin: You pay him directly, as agreed, and send him an anonymized address that is generated by your wallet to receive a bitcoin. The wallet then waits, listening for that address on the internet to come around, and seller sends a bitcoin to that address and into your wallet.
2.) Dealing with an exchange. You pay the exchange. The exchange either has it’s own stock of held bitcoins, or more commonly the exchange matches a buyer to a seller offering bitcoin at a certain price. The seller must deposit bitcoins with the exchange and can only sell what they have in their own account. The exchange facilitates the movement of money and bitcoins. This is where the fraud takes place if you are not careful.
It is never wise to leave a lot of money or bitcoins with the exchange, as some have been hacked, and some are dishonest.
Bitcoin exchanges will not operate on margin, and it is not possible to ‘short sell’ a bitcoin that you do not have in your own wallet possession. The exchange operates on set fees, and may charge a fraction of a bitcoin for each transaction.