<p>The exchange needs to have custody of the assets (tokens for a sell, money for a buy) before an order can be placed.  That's the only way they can guarantee that the order will execute as soon as it is matched, and that both parties will receive their assets, without the ability to back out.</p>

<p>So the correct order of your steps is:</p>

<blockquote>
  <p>3, 4, 1, 2, 5, 9, 6, 7, 8, 10.</p>
</blockquote>

<p>Of course, variations are possible: 9 could happen earlier, for instance.  The buy order could be placed before the sell.  Or the buyer could wait to withdraw the token they bought.</p>

<p>This doesn't account for the possibility of things like margin orders, where the exchange might allow someone to buy using money that's borrowed instead of deposited.</p>

CC BY-SA 4.0
2018-06-09T03:13:18.853Z
2018-06-09T03:13:18.853Z
Nate Eldredge
<p>I'm trying to understand all the logical steps that occur when a buy or sell order is submitted to an exchange such as Coinbase. </p>

<p>From what I understand currently, this is the general process. Am I on the right track here? </p>

<p><a href="https://i.sstatic.net/16J43.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/16J43.png" alt="enter image description here"></a></p>

<p>Where I think I'm wrong is step 3 and 7. I'm not sure if the tokens actually go to Coinbase for holding while the sale is "pending" or not. </p>

<blockchain><exchanges>
Currency exchange process
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# Currency exchange process

(Asked by: username_0 on 2018-06-08)

I'm trying to understand all the logical steps that occur when a buy or sell order is submitted to an exchange such as Coinbase.

From what I understand currently, this is the general process. Am I on the right track here?

[![enter image description here](https://i.sstatic.net/16J43.png)](https://i.sstatic.net/16J43.png)

Where I think I'm wrong is step 3 and 7. I'm not sure if the tokens actually go to Coinbase for holding while the sale is "pending" or not.

**Tags:** blockchain, exchanges


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## 1 answers

### Answer by username_1 on 2018-06-09. Score: 1 | Accepted answer

The exchange needs to have custody of the assets (tokens for a sell, money for a buy) before an order can be placed. That's the only way they can guarantee that the order will execute as soon as it is matched, and that both parties will receive their assets, without the ability to back out.

So the correct order of your steps is:

> 3, 4, 1, 2, 5, 9, 6, 7, 8, 10.

Of course, variations are possible: 9 could happen earlier, for instance. The buy order could be placed before the sell. Or the buyer could wait to withdraw the token they bought.

This doesn't account for the possibility of things like margin orders, where the exchange might allow someone to buy using money that's borrowed instead of deposited.


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