Topic: Bitcoin , Exchanges and the problem of the price/value of a Bitcoin - page 2. (Read 1949 times)

Your problem only exists in theory. It's true that not every Bitcoin is "in play" solely on the exchanges. But in practice everybody uses the prices from the exchanges as reference price.

The same is true for precious metals like gold and silver. For sure there are many traders of these metals outside the major exchange. But all of them use the spot price as reference for doing business.

ya.ya.yo!

No, the problem is far to be solved using an average price of all the exchanges. The problem continues. Are every bitcoin in a exchange? No they dont, so there is a huge amount of bitcoins that are bypassing exchanges and they are not taking into account.

Even if we sum all the exchanges we are only taking into account a portion of the bitcoins offer or bitcoin demand so is fair to say that the actual price only correspond to that portion of bitcoins that are "in play" into the exchanges.

Every person who has Bitcoins can act as an exchange, thats the point and we only can measure, nowadays, the portion of demand and offer wich corresponds to the exchanges (like Bitstamp, Huobi and so on), no the global demand and global offer of Bitcoin (as a "product" itself).

There are many coin
And not only affect sales

I have to admit that I don't get the problem.

There are multiple exchanges which may somewhat differ in exchange ratio. There are also over the counter transactions that may differ in exchange ratio. The extent to which exchange ratios differ is limited by arbitrage opportunities between these markets. Overall, exchange ratio tends to converge between all exchanges. There can be fungibility issues (withdraw limits / delays) that limit arbitrage opportunities and can increase the difference between exchanges, but a bitcoin will still be a bitcoin once withdrawn.

So if there is a problem, it's a trust problem related to the ability of the exchanges to provide the Bitcoins on their sheets. You still can exchange Bitcoin in person to circumvent this trust problem.


Simply use an average price with data from all notable exchanges. Problem solved.

ya.ya.yo!

I was having a conversation in other topic in my regional subforum about a problem that I think the actual Bitcoin economy have and actually I didnt have a convincing answer, thats the reason why I open this topic, may be some one with more knowledge could bring some light for this question....

First of all, my apologise, english is not my native language so I'm sure that I will have some bad expressions, if there's something that some one not understand... I'll do my best to try to fix it, the topic is a bit complex to explain. So, lets go.

Well, as the title of the topic says, the topic is about exchanges and their correlation to the price and value of Bitcoin.

In my opinion, the current way to measure and evaluate the price of a Bitcoin and the way that all of the exchanges works and their correlation with the price and value of bitcoin are a wrong system, and not very well fitted to cryptocurrencies.

As all of us knows... nowadays , exchanges works in the same way as a stock market exchange. There is a "meeting" of ask/bid and an orderbook to place the orders.

The people who wants to buy Bitcoin can place limited orders or simlpe orders. If some one choose a buy limited order, he/she will put a (big or small, depending of the quantity of fiat) "wall" below the current price and will work as a support of the price (if there is an acummulation of fiat in a specific price. If the perosn want to buy as the current prices... just put a simlpe order and thats it, the exchange will buy, dependeing of the density of the orderbook and the quantity the person want to buy at the current price or if theres is not enough orderbook density to sustain the price, the price of a Bitcoin will increase.

The inverse thing is apply o the sellers but the only thing it change is that the sellers will put bitcoins beyond the current price if it is a limited order or sell at the current prices if it is a simple order.

Well, more or less this is how  the current exchanges works.

What's the problem then??

The problem is this (IMO of course): The exchanges only shows a limited part of the value and the demand of bitcoins. The exchanges, nowadays, works as their own, as a centralized spot of buyers and sellers but this doesnt cover all of the demand, all of the offer and just shows to us the struggle between the number of bitcoins the people nioside the exchange have put into the ask or into the bid... no more.

Exchanges works standalone and with no correlation of what happen to a Bitcoin network, the blockcain ... or whatever. In this way, we could say that Bitcoins of Huobi, bitcoins of Bitstamp an the other exchanges...are independant one of the others of the rest of exchanges, so, we can conclude that theres no only one "bitcoin-product" offered, we have Huobicoins, Bitstampcoins, btc-e coins and so on. The only relation, as far as we can name it relation, is a psychological one, because each exchange work alone. Centralized.

The fact is that we get noticed of this problem with Mt.Gox, and the named "goxcoins" when the problems of Mt.Gox appeared but the problem envolve every exchange.

If the exchanges dont have any kind of relation between the bitcoins they sell, the bitcoins they buy and the bitcoins that other exchanges are offering and selling and the bitcoins that are being selling and buying bypassing the exchanges and off-the-track.

The current ability to measure the Bitcoin network, one bitcoin price and the way it is expanding or retracting are null. We only can make assumptions about the struggle inside the limited way to measure of an exchange.

In the other hand, and going further the problem, may be the next pump of Bitcoin price could never happen. Let me explain this. May be the Bitcoin is currently pumping and we cant get noticed about it because the only way to measure is from the people who is buying bitcoins in the exchanges and the thing is that if no one put walls below the current price... the price of bitcoin could never go up despite of the very very positive good news we were having in the past 6 months and as we recently saw with Paypal news. Price pump for a while but the price fall again as fast as the price had rised.


So, summing up: IMO we need to create a kind of new type of exchange that can correlate the entire activity inside the Bitcoin economy to have an appropiate value and price of it.


That's it, hope you all understood the main ideas and what I consider it is a problem.

Cheers,