What exactly are the requirements for building an exchange?
- Large amounts of capital, for one.
- If in the US, a banking license; Offshore, not a requirement.
- I'm not clear on how exchanges like coinbase source their crypto. Probably a totally stupid question but what happens to the cash I give coinbase after they go off to exchange it for say Ethereum? Do they have a network of whales that are selling them crypto for fiat for some sort of premium? Do they just hold crypto and exchange at market rates (which presumably exposes them to large potential loses)? I know they're linked to GDAX but this still doesn't explain how they source their currency initially.
Why do you think you need large amounts of capital? All an exchange does is match up buyers with sellers, and collect fees.
> Do they have a network of whales that are selling them crypto for fiat for some sort of premium?
This is basically exactly how it works. They have an actual exchange (GDAX) and they just do the exchange on GDAX, and then take an additional cut as fees.
> I know they're linked to GDAX but this still doesn't explain how they source their currency initially.
