MtGox makes more money the higher the price of bitcoin - conflict of interests? - page 2.

edd

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Quote from: monsterer on May 10, 2013, 01:09:56 PM

Quote from: DeathAndTaxes on May 10, 2013, 01:04:08 PM

I was asking the OP. I believe his argument is flawed. I agree with you in that IF there is a conflict of interest it is that panic/volatility/chaos leads to higher volume = more trading fees.

Ok, lets do some maths:

fees 0.6%:

1btc sold at $1000 = 0.006 * 1000 = $6 fee

1btc sold at $100 = 0.006 * 100 = $0.6 fee

Therefore, at higher dollar value of bitcoin, MtGox makes more per transaction and hence there is a conflict of interests?

Cheers, Paul.

First off, the more you trade, the lower your fees.

Secondly, 1 BTC = 1 BTC. I believe Mt. Gox has said at some point that they do not sell their BTC for USD. If I have time, I'll try to find the quote.

Thirdly, as others have mentioned, you are ignoring the volume (the size and number of transactions). It does Mt. Gox no good to make more per transaction if there are fewer of them and/or they are for smaller amounts.

epetroel

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Quote from: joesmoe2012 on May 10, 2013, 01:27:43 PM

They should adjust their fees now that they have grown larger, volume has increase, and the price has gone up so much.

Exactly. Given the same volume in USD, Gox will make more money at a higher bitcoin price simply because its much harder now to get a low commission rate.

joesmoe2012

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Ching-Chang;Ding-Dong

They should adjust their fees now that they have grown larger, volume has increase, and the price has gone up so much.

monsterer

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Quote from: DeathAndTaxes on May 10, 2013, 01:04:08 PM

I was asking the OP. I believe his argument is flawed. I agree with you in that IF there is a conflict of interest it is that panic/volatility/chaos leads to higher volume = more trading fees.

Ok, lets do some maths:

fees 0.6%:

1btc sold at $1000 = 0.006 * 1000 = $6 fee

1btc sold at $100 = 0.006 * 100 = $0.6 fee

Therefore, at higher dollar value of bitcoin, MtGox makes more per transaction and hence there is a conflict of interests?

Cheers, Paul.

DeathAndTaxes

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Gerald Davis

Quote from: muyuu on May 10, 2013, 01:01:08 PM

Quote from: DeathAndTaxes on May 10, 2013, 12:53:41 PM

Which is greater?
1% * 200,000 * $120
1% * 400,000 * $60

When I say they make more depending on the volume, I mean in terms of the same currency.

The more volume in BTC, the more BTC they make. The more volume in $, the more $ they make. Both linearly and ceteris paribus.

Right now volume and volatility are strongly correlated. Volume in BTC and $/BTC not so much.

I was asking the OP. I believe his argument is flawed. I agree with you in that IF there is a conflict of interest it is that panic/volatility/chaos leads to higher volume = more trading fees.

monsterer

legendary

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Fun fact:

Right now (at $118 / coin) you will have to wait for the price to move $1.428 to *break even* for a round-trip trade.

When the price of bitcoin reaches $1000 / coin, you would have to wait for price to move *$12* just to break-even.

Doesn't seem like that fee schedule can last because traders will just go elsewhere. If there is an elsewhere, of course!

Cheers, Paul.

muyuu

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Quote from: DeathAndTaxes on May 10, 2013, 12:53:41 PM

Which is greater?
1% * 200,000 * $120
1% * 400,000 * $60

When I say they make more depending on the volume, I mean in terms of the same currency.

The more volume in BTC, the more BTC they make. The more volume in $, the more $ they make. Both linearly and ceteris paribus.

Right now volume and volatility are strongly correlated. Volume in BTC and $/BTC not so much.

DeathAndTaxes

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Gerald Davis

Which is greater?
1% * 200,000 * $120
1% * 400,000 * $60

muyuu

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Merit: 1000

They actually make more money the higher the volume in the market.

monsterer

legendary

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Merit: 1007

Hi guys,

So, MtGox's fee schedule means they make more money per transaction the higher the price of bitcoin.

Doesn't this mean there is a glaring conflict of interests? The biggest and longest running bitcoin exchange *wants* the price to increase and have complete control over the market. Hmmm.

Thoughts?

Cheers, Paul.

Topic: MtGox makes more money the higher the price of bitcoin - conflict of interests? - page 2. (Read 2008 times)