What is Exchange?
A venue matching buyers and sellers. Most are custodial: balances shown are database entries, not coins you control.
Exchanges provide liquidity and price discovery, and they are where most people first acquire bitcoin. Internal transfers between customers never touch the chain.
Leaving coins on an exchange is a custody decision with counterparty risk, whatever the interface implies. It may be a reasonable decision; it should be a conscious one.
Related terms
Custodial
An arrangement where a third party holds the keys and you hold a claim against them.
EconomicsCounterparty risk
The risk that the other side of an arrangement fails to deliver — an exchange, a custodian, a lender.
MarketsLiquidity
How much can be bought or sold without materially moving the price.
MarketsProof of reserves
An attempt by a custodian to demonstrate cryptographically that it holds the bitcoin it claims to hold.
This definition is part of the Bitcoin Logical glossary. For the fuller explanation, start with Learn, or see the live numbers on The Bitcoin Signal.