[snip]
And projecting this thought to the crypto exchanges, what if some well known CEX do not have enough BTCs that is being traded on that exchange? All that numbers and volume could be fake. Then the CEX is becoming like a traditional bank, where unless everyone will want to withdraw their BTCs, they are ok trading non existing BTCs.
well, what do you think?
Everything that does not appear in a blockchain per transaction, considering it is a fake or not accurate number exists on exchange because everything is on-chain. Perhaps this could possibly lead to a situation where the volume and numbers reported by the exchange are not entirely accurate, and users may unknowingly be trading non-existent BTCs because it is not recording on a blockchain.
I think the best move is to choose reputable exchanges and take steps to ensure that they have sufficient reserves to cover all trades. For example --they may periodically conduct audits of their reserves and publish the results publicly to increase transparency to the public, that is how you will a reputable exchange and already tested.