Re: Question about hacking and private keys - Coinbase as example
Coinbase has several wallets and private keys. The private keys are required to send the coins between their wallets and to wallets they don't control.
When you buy bitcoins, Coinbase credits your account when the money is received from your bank. No bitcoins are moved.
When you deposit bitcoins in your Coinbase account, you are sending to a deposit address in Coinbase's wallet. When Coinbase receives the bitcoins, they credit your account. They know which account to credit because only your account uses that deposit address.
When you send bitcoins from your Coinbase account to a friend that has their own wallet, Coinbase debits your account and then uses their private keys to send the bitcoins from their wallet to your friend's wallet.
When you send bitcoins from your Coinbase account to your friend's Coinbase account, Coinbase simply debits your account and credits your friends account. No bitcoins are moved.
When you sell bitcoins in your Coinbase account, Coinbase simply debits your account and transfers the money to your bank account. No bitcoins are moved.
I hope that makes everything clear.
When you buy bitcoins, Coinbase credits your account when the money is received from your bank. No bitcoins are moved.
When you deposit bitcoins in your Coinbase account, you are sending to a deposit address in Coinbase's wallet. When Coinbase receives the bitcoins, they credit your account. They know which account to credit because only your account uses that deposit address.
When you send bitcoins from your Coinbase account to a friend that has their own wallet, Coinbase debits your account and then uses their private keys to send the bitcoins from their wallet to your friend's wallet.
When you send bitcoins from your Coinbase account to your friend's Coinbase account, Coinbase simply debits your account and credits your friends account. No bitcoins are moved.
When you sell bitcoins in your Coinbase account, Coinbase simply debits your account and transfers the money to your bank account. No bitcoins are moved.
I hope that makes everything clear.
You have just explained how the process works which is not only peculiar to coinbase but all of the exchange site operating in the market. What Op is asking is that what is the usefulness of the private key if its possible for someone to convert bitcoin to cash without the need to submit it somewhere or verify it.
The simple and straightforward truth is that private keys are to establish ownership. When one wants to bid for a project and you are required to have certain amount of money in your account, there only way to verify that is to show a verifiable bank statements not your flashy cars, wristwatches, clothes or chains. The same thing here in the case of bitcoin while bank statements can be forged, bitcoin messages cannot ( to a large extent) and keeping funds on exchange sites does not give room for that.
So yes you did understand perfectly what I was asking
but the last sentence kind of confused me. So are you saying keeping it on an exchange is a good thing or a bad thing?