How profitable are exchanges? | Bitcointalksearch.org

JorgeStolfi

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Quote from: pawel7777 on September 21, 2014, 01:34:19 PM

I know it's an old thread. But if anyone is still interested, Bitstamp have filed their first accounts recently, more in this thread:
https://bitcointalksearch.org/topic/bitstamps-first-annual-statements-785256

That is an abbreviated account of their financial state *as of Oct/2013*, which they were required to file under UK law (and they filed only in Aug/2014, maybe late).

It does not say how much profit they made. It says only that they have about 64.9 M USD that belong to clients and about 820 k USD of their own. Apparently it does not include their bitcoin holdings, since their assets (65.7 M USD) are described as "cash in the bank".

pawel7777

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I know it's an old thread. But if anyone is still interested, Bitstamp have filed their first accounts recently, more in this thread:

https://bitcointalksearch.org/topic/bitstamps-first-annual-statements-785256

leannemckim46

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Quote from: Eastwind on September 20, 2014, 05:43:30 AM

Quote from: johnyj on September 17, 2014, 01:27:37 AM

Exchanges can create money and bitcoin out of thin air in their database and no one will notice it, but they are just as risky as any other small bank, which also does the same thing

That is too dangerous for them if they are on the wrong side.

History shows that exchanges will eventually be on the wrong side of these kinds of trades/shanagians. They may be able to profit somewhat over short periods of time, but it will only take one major market swing in which they are on the wrong side of for them to end up with major losses in excess of what they would be able to make back. I would say that this kind of activity would almost certainly have a negative EV.

Borisz

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Fees make big money, 0.2% per trade is a huge amount of BTC at the end of the day.
Also withdrawal fees are sometimes high, especially for many small transactions.
All depends on the volume of trades.

Eastwind

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Quote from: johnyj on September 17, 2014, 01:27:37 AM

Exchanges can create money and bitcoin out of thin air in their database and no one will notice it, but they are just as risky as any other small bank, which also does the same thing

That is too dangerous for them if they are on the wrong side.

zorke

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Quote from: johnyj on September 17, 2014, 01:27:37 AM

Exchanges can create money and bitcoin out of thin air in their database and no one will notice it, but they are just as risky as any other small bank, which also does the same thing

Yes they can technically do this, but I think this would not be in their long term interest. I would believe that exchanges would be able to make more money from trading fees over the long term then they could buy selling phantom bitcoin on their exchange

AlexMine

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Exchanges can't actually add decimal values in their databases as it will lead to theit clients' funds unsecurity (there will be a negative delta between assets and liabilities) and they will have troubles while processing crypto- or fiat withdrawals as there won't be enough money. Great exchanges (especially today's leaders) possess internal terminals to control this figures in real time (at least our exchange had Wink

).

InwardContour

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I have seen someone who is selling a complete exchange website in the market.
If it's true you can find out yourself if it's really profitable Tongue

johnyj

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Beyond Imagination

Exchanges can create money and bitcoin out of thin air in their database and no one will notice it, but they are just as risky as any other small bank, which also does the same thing

snappa4ever

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Quote from: zorke on September 13, 2014, 02:28:36 AM

Quote from: leannemckim46 on September 10, 2014, 12:40:11 AM

Quote from: picolo on September 09, 2014, 12:48:33 PM

Quote from: wasserman99 on September 06, 2014, 04:36:54 PM

Quote from: picolo on September 06, 2014, 06:48:47 AM

Quote from: ?? on ??

The exchanges must be uncredible profitable. They must be milionars $. Anyway, other thing is this so much has to do with the profitability of the exchanges but rather the amount of coins stored on these types of exchanges. Lot of people like to trade altcoins in a "day trading" fashion and as a result keep their coins on the exchanges. This results there being more coins on the exchange then there really should be.

They have low margins, high costs, they can be hacked; who knows how many bitcoins they have and how many exchanges would survive if all customers were withdrawing all their coins

Well hopefully they would be able to survive from a "run on the bank" as they should have 100% reserves both in bitcoin and in fiat. I agree that they likely do have low margins as I think they spend a lot of money on security.

It is very hopeful to think they all have 100% reserves

When they start they have low fees, not a lot of traffic, high costs, unexpected costs and very small capital so they are burning cash; I let you figure out what cash they are burning at that moment in time

Well ideally they would keep their customer funds separate from their operating funds. I don't think exchanges have a lot of surprises when it comes to their costs so they likely would not need to keep a lot extra for these kinds of expenses.

I agree this is what they should do, however I don't think it is something they likely do. I don't think most exchanges are transparent enough, nor have sufficient internal controls to be able to perform this kind of accountability.

This is one thing the NY regulations are suppose bitcoin exchanges to do, and they must subject themselves to audits to prove they are in fact keeping their customers' money separate from their own.

I think the fact that exchanges make a lot of very small fees would somewhat hamper their ability to do this.

giveBTCpls

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Exchanges are making shitloads from fees, i can guarantee that. The amount of orders that happen daily with cryptos is unprecedented and they happen much faster than in any other markets due the digital fast nature of the asset. All these little fees sum up in big ass amounts. This plus the ads = money in the bank for the guys moving big money in their exchanges.

picolo

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Quote from: waqas on September 13, 2014, 10:01:26 AM

Quote from: zorke on September 13, 2014, 02:28:36 AM

Quote from: leannemckim46 on September 10, 2014, 12:40:11 AM

Quote from: picolo on September 09, 2014, 12:48:33 PM

Quote from: wasserman99 on September 06, 2014, 04:36:54 PM

Quote from: picolo on September 06, 2014, 06:48:47 AM

Quote from: ?? on ??

The exchanges must be uncredible profitable. They must be milionars $. Anyway, other thing is this so much has to do with the profitability of the exchanges but rather the amount of coins stored on these types of exchanges. Lot of people like to trade altcoins in a "day trading" fashion and as a result keep their coins on the exchanges. This results there being more coins on the exchange then there really should be.

They have low margins, high costs, they can be hacked; who knows how many bitcoins they have and how many exchanges would survive if all customers were withdrawing all their coins

Well hopefully they would be able to survive from a "run on the bank" as they should have 100% reserves both in bitcoin and in fiat. I agree that they likely do have low margins as I think they spend a lot of money on security.

It is very hopeful to think they all have 100% reserves

When they start they have low fees, not a lot of traffic, high costs, unexpected costs and very small capital so they are burning cash; I let you figure out what cash they are burning at that moment in time

Well ideally they would keep their customer funds separate from their operating funds. I don't think exchanges have a lot of surprises when it comes to their costs so they likely would not need to keep a lot extra for these kinds of expenses.

I agree this is what they should do, however I don't think it is something they likely do. I don't think most exchanges are transparent enough, nor have sufficient internal controls to be able to perform this kind of accountability.

Yea most of exchanges have no rules about this and they are using all funds just because of this some time exchanges run quickly

They use the money sent to them as their capital, like banks

waqas

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Quote from: zorke on September 13, 2014, 02:28:36 AM

Quote from: leannemckim46 on September 10, 2014, 12:40:11 AM

Quote from: picolo on September 09, 2014, 12:48:33 PM

Quote from: wasserman99 on September 06, 2014, 04:36:54 PM

Quote from: picolo on September 06, 2014, 06:48:47 AM

Quote from: ?? on ??

The exchanges must be uncredible profitable. They must be milionars $. Anyway, other thing is this so much has to do with the profitability of the exchanges but rather the amount of coins stored on these types of exchanges. Lot of people like to trade altcoins in a "day trading" fashion and as a result keep their coins on the exchanges. This results there being more coins on the exchange then there really should be.

They have low margins, high costs, they can be hacked; who knows how many bitcoins they have and how many exchanges would survive if all customers were withdrawing all their coins

Well hopefully they would be able to survive from a "run on the bank" as they should have 100% reserves both in bitcoin and in fiat. I agree that they likely do have low margins as I think they spend a lot of money on security.

It is very hopeful to think they all have 100% reserves

When they start they have low fees, not a lot of traffic, high costs, unexpected costs and very small capital so they are burning cash; I let you figure out what cash they are burning at that moment in time

Well ideally they would keep their customer funds separate from their operating funds. I don't think exchanges have a lot of surprises when it comes to their costs so they likely would not need to keep a lot extra for these kinds of expenses.

I agree this is what they should do, however I don't think it is something they likely do. I don't think most exchanges are transparent enough, nor have sufficient internal controls to be able to perform this kind of accountability.

Yea most of exchanges have no rules about this and they are using all funds just because of this some time exchanges run quickly

zorke

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Quote from: leannemckim46 on September 10, 2014, 12:40:11 AM

Quote from: picolo on September 09, 2014, 12:48:33 PM

Quote from: wasserman99 on September 06, 2014, 04:36:54 PM

Quote from: picolo on September 06, 2014, 06:48:47 AM

Quote from: ?? on ??

The exchanges must be uncredible profitable. They must be milionars $. Anyway, other thing is this so much has to do with the profitability of the exchanges but rather the amount of coins stored on these types of exchanges. Lot of people like to trade altcoins in a "day trading" fashion and as a result keep their coins on the exchanges. This results there being more coins on the exchange then there really should be.

They have low margins, high costs, they can be hacked; who knows how many bitcoins they have and how many exchanges would survive if all customers were withdrawing all their coins

Well hopefully they would be able to survive from a "run on the bank" as they should have 100% reserves both in bitcoin and in fiat. I agree that they likely do have low margins as I think they spend a lot of money on security.

It is very hopeful to think they all have 100% reserves

When they start they have low fees, not a lot of traffic, high costs, unexpected costs and very small capital so they are burning cash; I let you figure out what cash they are burning at that moment in time

Well ideally they would keep their customer funds separate from their operating funds. I don't think exchanges have a lot of surprises when it comes to their costs so they likely would not need to keep a lot extra for these kinds of expenses.

I agree this is what they should do, however I don't think it is something they likely do. I don't think most exchanges are transparent enough, nor have sufficient internal controls to be able to perform this kind of accountability.

BTCjust

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In addition to fees, if to attract venture capital, and that they make big money Cheesy

faiza1990

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★☆★777Coin★☆★

Quote from: Robif on September 10, 2014, 04:59:05 AM

Bitstamp owners have become the most wealthy people in their country, that tells you all Cheesy

But this not happen in one night or one month he done very hard work for his exchange and now one of most legit exchange in bitcoin community

Robif

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Bitstamp owners have become the most wealthy people in their country, that tells you all Cheesy

leannemckim46

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Quote from: picolo on September 09, 2014, 12:48:33 PM

Quote from: wasserman99 on September 06, 2014, 04:36:54 PM

Quote from: picolo on September 06, 2014, 06:48:47 AM

Quote from: ?? on ??

The exchanges must be uncredible profitable. They must be milionars $. Anyway, other thing is this so much has to do with the profitability of the exchanges but rather the amount of coins stored on these types of exchanges. Lot of people like to trade altcoins in a "day trading" fashion and as a result keep their coins on the exchanges. This results there being more coins on the exchange then there really should be.

They have low margins, high costs, they can be hacked; who knows how many bitcoins they have and how many exchanges would survive if all customers were withdrawing all their coins

Well hopefully they would be able to survive from a "run on the bank" as they should have 100% reserves both in bitcoin and in fiat. I agree that they likely do have low margins as I think they spend a lot of money on security.

It is very hopeful to think they all have 100% reserves

When they start they have low fees, not a lot of traffic, high costs, unexpected costs and very small capital so they are burning cash; I let you figure out what cash they are burning at that moment in time

Well ideally they would keep their customer funds separate from their operating funds. I don't think exchanges have a lot of surprises when it comes to their costs so they likely would not need to keep a lot extra for these kinds of expenses.

picolo

hero member

Activity: 1022

Merit: 500

Quote from: wasserman99 on September 06, 2014, 04:36:54 PM

Quote from: picolo on September 06, 2014, 06:48:47 AM

Quote from: ?? on ??

The exchanges must be uncredible profitable. They must be milionars $. Anyway, other thing is this so much has to do with the profitability of the exchanges but rather the amount of coins stored on these types of exchanges. Lot of people like to trade altcoins in a "day trading" fashion and as a result keep their coins on the exchanges. This results there being more coins on the exchange then there really should be.

They have low margins, high costs, they can be hacked; who knows how many bitcoins they have and how many exchanges would survive if all customers were withdrawing all their coins

Well hopefully they would be able to survive from a "run on the bank" as they should have 100% reserves both in bitcoin and in fiat. I agree that they likely do have low margins as I think they spend a lot of money on security.

It is very hopeful to think they all have 100% reserves

When they start they have low fees, not a lot of traffic, high costs, unexpected costs and very small capital so they are burning cash; I let you figure out what cash they are burning at that moment in time

wasserman99

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Activity: 476

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Quote from: picolo on September 06, 2014, 06:48:47 AM

Quote from: ?? on ??

The exchanges must be uncredible profitable. They must be milionars $. Anyway, other thing is this so much has to do with the profitability of the exchanges but rather the amount of coins stored on these types of exchanges. Lot of people like to trade altcoins in a "day trading" fashion and as a result keep their coins on the exchanges. This results there being more coins on the exchange then there really should be.

They have low margins, high costs, they can be hacked; who knows how many bitcoins they have and how many exchanges would survive if all customers were withdrawing all their coins

Well hopefully they would be able to survive from a "run on the bank" as they should have 100% reserves both in bitcoin and in fiat. I agree that they likely do have low margins as I think they spend a lot of money on security.

Topic: How profitable are exchanges? (Read 15797 times)