How will we move away from the infamous exchange prices? - page 2.

cafucafucafu

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Quote from: AgentofCoin on February 19, 2015, 01:56:54 PM

Quote from: cafucafucafu on February 19, 2015, 01:36:39 PM

Quote from: AgentofCoin on February 19, 2015, 01:22:28 PM

Quote from: cafucafucafu on February 19, 2015, 12:34:48 PM

Quote from: HarmonLi on February 19, 2015, 07:13:42 AM

The different exchanges 'follow' each other because of arbitrage and the (wonderful) property named 'fungibility' which Bitcoin possesses!

...
E.g. there is a dump on Bitfinex, then the Chinese exchanges follow that dump. I can't see how arbitrage can work at all in that situation. You then need to transfer from Yuan back to Dollars. There simply isn't enough time to do that.
...

My understanding is that fiat & btc is kept in both exchanges by the people doing arbitrage. Buy on one exchange, Sell on the other.
They aren't usually depositing/withdrawing constantly, as you said, there isn't enough time.
Also, i think most of the arbitrage traders are automated bot traders.

This doesn't work. I have done the calculations and could not find a viable way in which this works.

If you can prove that it is arbitrage that is responsible for the exchanges following each-other, then my whole OP is redundant. I contend that when a dump happens on one exchange then the people on the other exchanges follow due to panic/hope.

Arbitrage is responsible from moment to moment, 24/7, mostly with bots, when there is no panic/hope or dump.
When there is a dump, the exchanges follow each other (arbitrage is not the purpose, but to cut losses), because of (1) the people on that exchange selling, (2) peoples call settings they previously set activating, & (3) trading bots cutting losses.
You can't really arbitrage during a dump. If you could, that might be possible insider information and was a pump & dump scheme.

A dump is the best time for arbitrage. I know how to code bots and I can tell you that when there is little volatility it's much harder to find enough time to do arbitrage.

Nagle

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Quote from: cafucafucafu on February 19, 2015, 12:07:54 AM

People value BTC at rates other than what is on the exchanges (e.g. non exchange sales), but the famous exchanges set the price and everywhere else follows. This monopoly on the price needs to be broken.

That's how markets work. As long all the exchanges track each other reasonably closely, and the bid/ask spreads are small, no single exchange controls the price and the market is working. When you see big differences between exchanges, an exchange is probably in trouble. (Mt. Gox was in that condition for months.)

If anybody has a "monopoly on price", it's the Coinbase buy price, which most merchants use. It's usually very close to the exchange price; they don't seem to use that to make money on the spread.

LocalBitcoins is an inefficient market - the bid/ask spreads are huge. Robocoin ATMs overcharge - 7% spread to buy, 7% spread to sell, plus a 5% fee. Robocoin used to put their buy and sell prices on the machine's idle screen, but stopped doing that to hide their huge spread.

AgentofCoin

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Quote from: cafucafucafu on February 19, 2015, 01:36:39 PM

Quote from: AgentofCoin on February 19, 2015, 01:22:28 PM

Quote from: cafucafucafu on February 19, 2015, 12:34:48 PM

Quote from: HarmonLi on February 19, 2015, 07:13:42 AM

The different exchanges 'follow' each other because of arbitrage and the (wonderful) property named 'fungibility' which Bitcoin possesses!

...
E.g. there is a dump on Bitfinex, then the Chinese exchanges follow that dump. I can't see how arbitrage can work at all in that situation. You then need to transfer from Yuan back to Dollars. There simply isn't enough time to do that.
...

My understanding is that fiat & btc is kept in both exchanges by the people doing arbitrage. Buy on one exchange, Sell on the other.
They aren't usually depositing/withdrawing constantly, as you said, there isn't enough time.
Also, i think most of the arbitrage traders are automated bot traders.

This doesn't work. I have done the calculations and could not find a viable way in which this works.

If you can prove that it is arbitrage that is responsible for the exchanges following each-other, then my whole OP is redundant. I contend that when a dump happens on one exchange then the people on the other exchanges follow due to panic/hope.

Arbitrage is responsible from moment to moment, 24/7, mostly with bots, when there is no panic/hope or dump.
When there is a dump, the exchanges follow each other (arbitrage is not the purpose, but to cut losses), because of (1) the people on that exchange selling, (2) peoples call settings they previously set activating, & (3) trading bots cutting losses.
You can't really arbitrage during a dump. If you could, that might be possible insider information and was a pump & dump scheme.

CtrlAltBernanke420

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There could be a day very soon where oil and major commodities are commanded by the US gov to trade in bitcoin if not get nationalized. And then bitcoin will be worth a bitcoin, we'll get there. Sooner rather than later..

Think of it like this, Gyft and egifter, coin base, bitpay. circle are paving the way for corporations to accept bitcoin for now they are selling them instantly for fiat… once they get this under control they could all have a conference call with each other and say beginning tomorrow at midnight at bitcoin transactions will stay in bitcoin. No more fiat, and then you will have a bitcoin worth somewhere in the range of 10,000/coin to 1million a coin.. The fed will have to step in to stabilize the price a bit until the masses catch up and then consumer/business2business supply demand take over… This is the only way quantitative easing can end without crashing the markets and global wealth.

cafucafucafu

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Quote from: AgentofCoin on February 19, 2015, 01:22:28 PM

Quote from: cafucafucafu on February 19, 2015, 12:34:48 PM

Quote from: HarmonLi on February 19, 2015, 07:13:42 AM

The different exchanges 'follow' each other because of arbitrage and the (wonderful) property named 'fungibility' which Bitcoin possesses!

...
E.g. there is a dump on Bitfinex, then the Chinese exchanges follow that dump. I can't see how arbitrage can work at all in that situation. You then need to transfer from Yuan back to Dollars. There simply isn't enough time to do that.
...

My understanding is that fiat & btc is kept in both exchanges by the people doing arbitrage. Buy on one exchange, Sell on the other.
They aren't usually depositing/withdrawing constantly, as you said, there isn't enough time.
Also, i think most of the arbitrage traders are automated bot traders.

This doesn't work. I have done the calculations and could not find a viable way in which this works.

If you can prove that it is arbitrage that is responsible for the exchanges following each-other, then my whole OP is redundant. I contend that when a dump happens on one exchange then the people on the other exchanges follow due to panic/hope.

AgentofCoin

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Quote from: cafucafucafu on February 19, 2015, 12:34:48 PM

Quote from: HarmonLi on February 19, 2015, 07:13:42 AM

The different exchanges 'follow' each other because of arbitrage and the (wonderful) property named 'fungibility' which Bitcoin possesses!

...
E.g. there is a dump on Bitfinex, then the Chinese exchanges follow that dump. I can't see how arbitrage can work at all in that situation. You then need to transfer from Yuan back to Dollars. There simply isn't enough time to do that.
...

My understanding is that fiat & btc is kept in both exchanges by the people doing arbitrage. Buy on one exchange, Sell on the other.
They aren't usually depositing/withdrawing constantly, as you said, there isn't enough time.
Also, i think most of the arbitrage traders are automated bot traders.

countryfree

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Your country may be your worst enemy

Quote from: cafucafucafu on February 19, 2015, 12:07:54 AM

the famous exchanges set the price and everywhere else follows.

The market sets the price. An exchange only shows a small piece of it. I've never used bitstamp, nor bitfinex or coinbase. There are many competing exchanges, and that's the proof they don't control anything (even though, it's not a perfect market).

cafucafucafu

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Quote from: HarmonLi on February 19, 2015, 07:13:42 AM

The different exchanges 'follow' each other because of arbitrage and the (wonderful) property named 'fungibility' which Bitcoin possesses!

I have big doubts about this. It is not possible to transfer fiat from one exchange to another so quickly. It seems like one exchange has a change in price and the others follow like sheep. This is my contention. If arbitrage was the actual reason then my op would be redundant.

E.g. there is a dump on Bitfinex, then the Chinese exchanges follow that dump. I can't see how arbitrage can work at all in that situation. You then need to transfer from Yuan back to Dollars. There simply isn't enough time to do that.

So it looks like exchanges have too much influence on the price.

hashman

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Quote from: Finchy on February 19, 2015, 07:25:01 AM

I think we'll always be stuck with the exchanges prices. Isn't that how all currencies and even stocks and shares' value is measured? Outside sources can still have their influence on price, though. I think more and more people will choose to trade coins outside of exchanges but they still need to get their value from somewhere.

Yes we are forced to rely on centralized markets, and hence the numerous security holes we face. However there is still hope for decentralized markets of publicly verifiable assets.

Finchy

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I think we'll always be stuck with the exchanges prices. Isn't that how all currencies and even stocks and shares' value is measured? Outside sources can still have their influence on price, though. I think more and more people will choose to trade coins outside of exchanges but they still need to get their value from somewhere.

SirChiko

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Quote from: cafucafucafu on February 19, 2015, 12:07:54 AM

People value BTC at rates other than what is on the exchanges (e.g. non exchange sales), but the famous exchanges set the price and everywhere else follows. This monopoly on the price needs to be broken. E.g. if Bitfinex goes down then even Localbitcoins and the US Marshals price goes along with it. This is making the worldwide price dependent on low volume exchange prices.

We can't have a state where there is greater adoption and people are using bitcoin everyday and the price still hinges on what Bitfinex, Bitstamp or Bitwhatever says.

Lots of people (e.g. the third world) can start using BTC and their transactions have little affect on the price. This needs amending.

This is the way curret marken sadly runs. But there should be some healthly exchange rising (coinbase) that can't admit they were hacked bla bla but if that would happen they gotta cover everything.
Also DON'T STORE YOUR COINS ON 3RD PARTY EXCHANGE AND/OR USE IT AS AN WALLET. That's called HIGH RISK.

HarmonLi

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Honest 80s business!

How do you intend to find a price then? A free (and esp. unregulated) market just works that way. The price needs to be discovered somehow. And this works by staging supply against demand, and vice versa. The exchanges are a catalyst for finding the price. The different exchanges 'follow' each other because of arbitrage and the (wonderful) property named 'fungibility' which Bitcoin possesses!

TheGame

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You just lost

Quote from: cafucafucafu on February 19, 2015, 12:07:54 AM

Lots of people (e.g. the third world) can start using BTC and their transactions have little affect on the price. This needs amending.

That's not true. Even if these transactions happen outside of exchanges they still contribute to the supply and demand of coins but they will need to sell or exchange their coins for fiat eventually. If there's more demand for coins in the real world people will need to get them from somewhere.

koelen3

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Sooner or later, a man who wears two faces forgets

We cannot move away from these exchange price
The value of bitcoin depends on the trading volume and rate , it will eventually go up slowly but seeing the hacks and vulnerabilities it is open to, it ain't going up soon

ericjarvies

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Quote from: gbianchi on February 19, 2015, 03:27:36 AM

the answer is quite simple:

DO NOT HOLD YOUR BTC ON THIRD PARTY EXCHANGES – BE YOUR OWN BANK

https://bitcointalksearch.org/topic/dataexchanges-their-way-of-using-a-fractional-reserve-and-generate-inflation-945881

Amen to that!

Perhaps a more accurate statement is to hold your BTC in your own wallet on your own computer or USB wallet or paper wallet, so that your BTC (or other cryptocurrency) is not subject to control, theft or seizure by any third party... private or government or otherwise.

gbianchi

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the answer is quite simple:

DO NOT HOLD YOUR BTC ON THIRD PARTY EXCHANGES – BE YOUR OWN BANK

https://bitcointalksearch.org/topic/dataexchanges-their-way-of-using-a-fractional-reserve-and-generate-inflation-945881

ericjarvies

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The problem with Bitcoin (and all cryptocurrencies) has little or nothing to do with the digital exchanges, and almost everything to do with the fiat-in/fiat-out banking gateways.

Fiat currency is controlled by government, and in case you've not noticed, the people are as well. Only when the people garner absolute control of their government, can they then control their personal value/wealth and the exchange thereof.

Kprawn

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I think people will not have a problem following the exchange rate, if they were sure that the price was not manipulated.

We have seen transaction volumes exceeding 100 000 for a while now, and the price does not reflect that. {Yes, I know it's not a true indicator but it's one of them}

The exchanges are the weakest link in the Bitcoin chain. {Hacks; manipulation...etc. etc.} We will have to find a suitable replacement for them in the form of p2p decentralized exchanges.

These exchanges are pulling us down, and we must prevent another MtGox fiasco. Angry

Q7

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Quote from: cafucafucafu on February 19, 2015, 12:07:54 AM

People value BTC at rates other than what is on the exchanges (e.g. non exchange sales), but the famous exchanges set the price and everywhere else follows. This monopoly on the price needs to be broken. E.g. if Bitfinex goes down then even Localbitcoins and the US Marshals price goes along with it. This is making the worldwide price dependent on low volume exchange prices.

We can't have a state where there is greater adoption and people are using bitcoin everyday and the price still hinges on what Bitfinex, Bitstamp or Bitwhatever says.

Lots of people (e.g. the third world) can start using BTC and their transactions have little affect on the price. This needs amending.

If a person want to exchange fiat to btc and vice versa.. no matter what they will still follow prevailing market price. That is what trading is all about. Having said that I'm not sure if there is any other way the trend can be broken. Unless you have a community of people living at a remote area totally isolated from the rest of the world and do not have access to internet or even live price feed.
Or another way do you actually mean we are supposed to have something like a barter system?

AgentofCoin

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Quote from: cafucafucafu on February 19, 2015, 12:07:54 AM

People value BTC at rates other than what is on the exchanges (e.g. non exchange sales), but the famous exchanges set the price and everywhere else follows. This monopoly on the price needs to be broken. E.g. if Bitfinex goes down then even Localbitcoins and the US Marshals price goes along with it. This is making the worldwide price dependent on low volume exchange prices.

(I might be totally misunderstanding this post)
Non-Exchange sales are usually very high. Sometimes with a rate of 20% or more over exchange prices.
From what i have seen, usually the people who buy at those rates are just desperate to get some BTC.

What is the value you think BTC should be right now?

Topic: How will we move away from the infamous exchange prices? - page 2. (Read 2903 times)