When buying on an exchange, your money stays on traditional banking "rails". The exchange simply updates its internal "spreadsheet" to show you own a piece of their Bitcoin pool.
A small portion (usually less than 1%) is kept by the exchange as a service fee. Brokerage Models: where does the money go when you buy bitcoin
All Bitcoin originally enters the market through miners. When you buy "newly" minted Bitcoin, you are essentially paying a miner for the computational work they performed to create that block. Ownership Risk: "The IOU" When buying on an exchange, your money stays
Your money goes directly to the individual seller's bank account or mobile wallet, often facilitated by an escrow system on the platform. Brokerage Models: All Bitcoin originally enters the market
AI responses may include mistakes. For financial advice, consult a professional. Learn more What Actually Happens to Your Money When You Buy Crypto
Real blockchain fees only occur when you withdraw your Bitcoin to a private wallet. These small amounts of BTC (not your initial fiat deposit) go to miners who secure the network.