Where does the FIAT go when we buy Crypto?

I have a question… What happens to the FIAT an exchange has (Ex: Coinbase) when I purchase a given Crypto? For example; if I buy $1000 of BTC on Coinbase, what does Coinbase do with my $1000 worth of USD FIAT? Where does that FIAT go? Also, how does this ‘dynamic’ change for various Crypto Currencies? I assume any XRP a trader buys goes to Ripple, but what about Bitcoin and Cardano? Is it correct to assume the exchanges are Market Makers that hold a bunch of Crypto in their wallets and sell it to us from there? Still, what about an exchanges’ initial purchase? Where did their initial FIAT go to? Or better yet, the first Bitcoin purchases in 2009’ish… Where did that intial FIAT end up? Satoshi’s account at Warren Buffet’s Wells Fargo? ;> Thanks

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i don’t really get your question.

every exchange has to buy their currencies as every other normal dude aswell.

there are some differents between bitcoin and some other altcoins like ada in terms how they started.

cardano is made by a company and there was an ICO for cardano where only a few big players could purchase at the beginning (correct me if im wrong here).

bitcoin on the other hand is fully mined since the start, every bitcoin which has been mined has been sold from a private person to another.


Excellent! Thank you for responding.

So, is this correct:

  1. In an ICO, the currency / blockchain offers a specified amount of tokens (Ex: 1,000).

  2. Investors in the ICO purchase those tokens from the blockchain org with FIAT at a discount for $1.00. The blockchain organization uses the FIAT for n.

  3. An exchange (Ex: Coinbase) is part of that ICO and purchases 500 of those ICO tokens.

  4. Coinbase, a market maker, can now begin selling their tokens/coins on their exchange for market value. At some point, Coinbase sells all of their ICO tokens.

  5. The Blockchain has a total of 10,000 tokens / coins that are mintable.

  6. Retail Trader transfers USD to Coinbase to buy Crypto.

  7. Retail Trader purchases Crypto (Ex: BTC, XRP, ADA) on Coinbase.

  8. *** What does Coinbase do with that FIAT if the coins that the Retail Trader purchased were created through the minting process.

My question is:

FIAT is always at the front end of a crypto purchase:

  1. In an ICO it goes to the blockchain org.
  2. In a retail purchase on an exchange that accepts FIAT (Ex: Coinbase).
  3. (hypothetically) Purchasing coffee with BTC at Starbucks.

Where does the FIAT in these cases / transactions end up?

If I am buying coins that were minted by miners and NOT the ICO coins Coinbase has already sold, who ends up with my FIAT?

Thanks for anything! I can’t find an answer to this vexing question of mine…

sorry @ItsDoneWhenItsDone i dont understand that question again :smiley:

a exchange does not to own any bitcoin at the moment you purchase the coin on their exchange. only if you withdraw those coins they really have to own the coins so they can send it to your wallet.

but in general you can say money from customer --> exchange --> miners.
theres a different in coins like ada because there are no new tokens, or atleast just a few. so if a exchange needs more coins because people are withdrawing all their coins from the exchange, they have to buy new tokens from a other market.


Thanks again for responding!

“but in general you can say money from customer --> exchange --> miners”

That’s not the case. Miners are rewarded with the coin they mine, not with the FIAT from the purchase.

Imagine the first Bitcoin transaction ever… Start to finish; how was that conducted?

  1. Someone had to have exchanged FIAT for BTC.
  2. Someone had to have exchanged that BTC for the FIAT.

The FIAT generated in that first sale went to someone or somewhere.

This same dynamic, though diverse because of the different crypto currencies, has to be true today; that is, FIAT turns into Crypto and the FIAT used to buy the crypto doesn’t just vaporize, it still exists somewhere. Who receives it?


If I sell you my crypto, I cash via an off-ramp and buy some beer.

What if you’re in Saudi Arabia? ;>

You say that like it’s either/or, don’t understand why you would think that. But let’s forget the word “reward” for a moment. They mine coin, which they sell for fiat. Of course they have costs such as hardware and power, so some of that fiat “ends up” with these suppliers. The miner keeps some, which is their profit.

Does that answer your question?


RobJF - Thank you for your reply.

Let’s just talk about Bitcoin when it was initially available as a financial instrument for a moment. Back when Bitcoin first came out (I remember it vividly because I recommended it to a banker that was refinancing my house. Had I sold my house and bought Bitcoin I’d be worth over 5 Billion - slaps his forehead). Anyway, back in 09’ Bitcoin is in its earliest stages. ‘Satoshi’ releases / deploys Bitcoin. The public starts purchasing BTC.

  1. Who purchased those initial BTC? Answer: the retail trader (Joe public or whale) and exchanges (if they existed at that point).
  2. What did they use to purchase those initial BTC? Answer: FIAT transfer (in whatever fashion).
  3. Where did the FIAT used to make those initial BTC purchases go? To Satoshi?

I believe I know the answer. I’m just trying to verify my hypothesis.

if im right satoshi never sold any of his bitcoins, so the money went to the miner which sold their first bitcoins to that time.

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I see. Thank you!

What troubles me is why ‘Satoshi’ went to all this effort, never sold anything, and chose to remain anonymous… I believe I know who ‘Satoshi’ is, and so may you ;>

It’s actually Queen Elizabeth of Great Britain, she’s a genius mathematician and coder working for the Illuminati, who foresaw the possibilities of cryptocurrency and decided to get in on the ground floor.


So that’s why the Cardano OBFT Hardfork was deployed at 4:44 Eastern US Time… This all being done so Prince Andrew has a more convenient and anonymous way to pay for talent… Ah… Thanks for the insight ;>

Hi. You can think of an exchange as an intermediary. You don’t really buy crypto from coinbase, you buy it from someone else that created a sell request on coinbase. Coinbase gets the fee.

So your money goes to the user (or users) that sold their crypto.
If those users don’t withdraw the money, coinbase acts like a bank and stores the money for them until they withdraw it.


Thanks adapt!

Curious, where did the first FIAT used to purchased the first BTC go? Someone paid (Ex) $1.00 for n BTC. Where did that FIAT end up? The first BTC traders had to ‘Buy In’ to the blockchain. There was no BTC ICO, correct? And, if there was, where would the FIAT have gone?

There are 2 ways to get BTC, you can buy it or mine it (you put a computer/device doing useful work on the chain and, as a payment, you get some coins).

The first BTC was mined, not bought.

It ended up in the pocket of someone that mined BTC and decided to sell it.


Got it! I’m clear now. Thanks dewd (adapt)!

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Could you tell me what happens when more people want to buy than sell? How does that work
Thank you :pray:

The simplest answer is that some of the buyers (would-be) are disappointed. In an ideal market they’re the ones who are less keen, therefore willing to pay less, because the price goes up, but other factors come into play in the real world, such as timing. This is basic microeconomics.

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