How do Crypto Exchange Buy / Sell orders impact on Ripple Ledger

[ProfMoriarty]

Based on what I have read a Crypto Exchange (e.g. Bitstamp) when I place a sell order e.g. into EUR will attempt to match my order with other Bitstamp Exchange users opposite trades.

Thus say sell 1000 XRP at 1 euro each - there might be 10 users wanting to sell at that level.

And the buy and sell orders determine the price on that exchange.

If that is the case then typically a users buy / sell is not actually involving any Ripple Ledger activity right?

It is simply Exchange Users trading with each other.

But if that is that case is there not a level of risk involved for the Exchange - wouldnt the Exchange itself have to hold a common bucket of XRP (maybe purchased at the start).

And if for example there was a large volume of Buy or Sell trades that cant be satisfied - at what point do they try to trade with other Exchanges or with Ripple themselves?

[RippleHerToShreds]

Exchanges are peer to peer matching sites, so they need to hold zero XRP themselves.

Thus, they do not need a "bucket" to start with.

In answer to your last question "at what point do they try to trade with other Exchanges or with Ripple themselves", they don't have any need to as they are simply a platform for you and I et al to meet and trade.

 

[ProfMoriarty]

11 minutes ago, RippleHerToShreds said:

Exchanges are peer to peer matching sites, so they need to hold zero XRP themselves.

Thus, they do not need a "bucket" to start with.

In answer to your last question "at what point do they try to trade with other Exchanges or with Ripple themselves", they don't have any need to as they are simply a platform for you and I et al to meet and trade.

 

Thanks for your response! 

But exchange end-user accounts do not correspond to Ripple Accounts right?

Bitstamp for example only has 1 or 2 Ripple Ledger accounts.

When I as a user send XRP to my Exchange account I need to generate and specify a Destination tags so the Exchange knows the transfer is for me right?

(Similar to Bank Sender Reference when I transfer to a single Jumbo Credit Card Issuer account owned by my Bank - I specify my Card number so they know it is for my account)

I assume I am transferring to a common Bitstamp account and the Destination tag differentiates it as for me.

So am I right in thinking then that the busiest Ripple Ledger Accounts are the Exchange ones and most activity on the Ledger is when the Exchanges are trading between themselves - on behalf of their end User accounts.

And presumably most end-user trades do not result in a Ripple ledger transaction (instead they would result in internal Exchange trades)

[RippleHerToShreds]

5 minutes ago, ProfMoriarty said:

I assume I am transferring to a common Bitstamp account and the Destination tag differentiates it as for me.

Correct.
Although some exchanges actually host a "proper" wallet for you, for which you need 20xrp to activate (Gatehub, for example).

 

6 minutes ago, ProfMoriarty said:

But exchange end-user accounts do not correspond to Ripple Accounts right?

Is that not just another way of asking the same quesion?
The Bitstamp wallet is a "Ripple account". They just hold your xrp in it on your behalf. Just like they hold your FIAT in their account at their bank on your behalf.

[ProfMoriarty]

Just spotted this thread that says Bitstamp does hold XRPs themselves:

 

[RippleHerToShreds]

I read it as they hold XRP on our behalf.