<p>This is not really a bitcoin related issue.  As long as the exchanges have 100% reserves, they can always pay.  This means they need to have the sum of all balances of all customers on their own account.  </p>

<p>The problem is that some exchanges apply a fractional reserve.  Using part of the users money to make investments or to cover operating costs.  You are correct to be worried for those exchanges bankruptcy should exceptional selling occur.</p>

<p>Kraken has a concept where they try to cryptographically prove their reserves <a href="https://www.kraken.com/security/audit" rel="nofollow noreferrer">https://www.kraken.com/security/audit</a></p>

<p>Not sure if other exchanges also have such a concept.  </p>

CC BY-SA 3.0
2017-12-28T14:10:59.213Z
2017-12-28T14:10:59.213Z
ubro
<p>They can't survive this explosion. New exchanges like binance are coming out and they will replace the old exchanges.
Here's a guide to choose the best exchange if you want -> <a href="https://medium.com/@redqop89/trading-guide-for-bitcoin-ethereum-ripple-and-other-cryptocurrencies-6773ab4b6b2" rel="nofollow noreferrer">https://medium.com/@redqop89/trading-guide-for-bitcoin-ethereum-ripple-and-other-cryptocurrencies-6773ab4b6b2</a></p>

CC BY-SA 3.0
2018-01-14T18:47:35.967Z
2018-01-14T18:47:35.967Z
Daniele De Blu
<p>I am wondering how exchange platforms such as Kraken or Bitfinex can survive bubble exposions? People exchange real currencies for cryptocurrencies. When a bubble explode a lot of people want to trade cryptocurrencies for real currencies so the exchange platform will lack liquidity. </p>

<p>How do they can survive and avoid bankrupt?</p>

<trading><bitfinex><kraken>
How exchange platforms work?
nowox
# How exchange platforms work?

(Asked by: username_0 on 2017-12-28)

I am wondering how exchange platforms such as Kraken or Bitfinex can survive bubble exposions? People exchange real currencies for cryptocurrencies. When a bubble explode a lot of people want to trade cryptocurrencies for real currencies so the exchange platform will lack liquidity.

How do they can survive and avoid bankrupt?

**Tags:** trading, bitfinex, kraken


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## 2 answers

### Answer by username_1 on 2017-12-28. Score: 1 | Accepted answer

This is not really a bitcoin related issue. As long as the exchanges have 100% reserves, they can always pay. This means they need to have the sum of all balances of all customers on their own account.

The problem is that some exchanges apply a fractional reserve. Using part of the users money to make investments or to cover operating costs. You are correct to be worried for those exchanges bankruptcy should exceptional selling occur.

Kraken has a concept where they try to cryptographically prove their reserves <https://www.kraken.com/security/audit>

Not sure if other exchanges also have such a concept.


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### Answer by username_2 on 2018-01-14. Score: 0

They can't survive this explosion. New exchanges like binance are coming out and they will replace the old exchanges.
Here's a guide to choose the best exchange if you want -> <https://medium.com/@redqop89/trading-guide-for-bitcoin-ethereum-ripple-and-other-cryptocurrencies-6773ab4b6b2>


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