Large transactions and exchanges

Trading
1

This is more of a question as to how exchanges actually work and some general thoughts I have, specific to BTC but really can apply to any cryptocurrency.

I’ve found at certain times I would like to either make a large purchase of BTC or a sale for fiat, and my only good option is to go to an exchange. This got me thinking, how do exchanges actually deal with this? Do they just keep a huge number of BTC around for buyers, and a large sum of fiat for sellers? I would think this has to be the case to execute the trade quickly, and they need to adjust this buffer based on the market.

Is there a way to make such a thing decentralized? The decentralized exchange would need to keep BTC and fiat laying around in the system, owned by the ‘exchange’ somehow.

One thing Bisq provides is a good throttle to avoid making emotional trading decisions. It takes some time to find and complete an offer, and you have a transaction limit. Since trades are not automated, there is also so many trades a human can do. But I find this eats a lot of human time. I would love to see Bisq evolve into something that can handle high volumes and more automation.

I would envision something like telling Bisq: Here is $50k and I am willing to spend between X and Y per Bitcoin over a time range. Go find and fulfill all the orders. Maybe an API could be provided for people to write scripts with this logic.

I see the other threads about fiat transfers being hard to automate, but I think that will come eventually.

2

Yes, to my knowledge centralized exchanges keep a certain amount of currency at hand for trades. If they start running out, they go to somebody else (like a bank or a bigger exchange) who they have a deal with and get more so they can finish the day or something like that.

Fiat is really not as evolved as Bitcoin and can not support many of Bitcoin’s features, like multisig.
The problem is that even tho there might be a way for an decentralized exchange to keep Bitcoins there is no real way for it to keep fiat or even be able to receive it in a decentralized manner.

All the solutions for Bisq to keep some fiat, for whatever reason, require someone to keep the fiat funds in their bank account. And that is centralization, by definition. If banks start supporting accounts that are not owned by anyone in particular, but are controlled by a certain algorithm, like multisig, then sure, but if they did, they would start sounding a lot like a private cryptocurrency.