It's obvious that this would be the case in a fractional banking system, but assuming that Gemini or Coinbase aren't complete crooks, through which mechanism would they not have enough cash on hand?
For each transaction on their exchange, they'd receive money from the buyer and pass that on to the seller?
You can trade BTC/LTC and BTC/ETH as well, though, and all of the cryptocurrencies can move into/out of them at will. There are steps they could take to ensure liquidity in USD, but they're relatively expensive.
I, personally, prefer to keep my dollars in dollars and in an FDIC insured account.
It's obvious that this would be the case in a fractional banking system, but assuming that Gemini or Coinbase aren't complete crooks, through which mechanism would they not have enough cash on hand?
For each transaction on their exchange, they'd receive money from the buyer and pass that on to the seller?