Topic: Newbie (to Bitcoin, not Trading) Question (Read 636 times)

Just about anyone can setup a crypto currency exchange. I saw some ads that were advertising some bitcoin and other altcoin exchange software.

I think it was VBBE or something like that.

Essentially, anyone can become their own exchange if they want to put the marketing and advertising money budget into it.

That should help de-centralize the power of the big btc exchanges now.

Also, there's no real regulations either 

Yes the price is determined by the exchanges because they have the greatest volume, its not easy to buy/sell 6000 btcs by other ways, and  would recommend an exchange to buy considerable amounts of btcs , ANXpro is a secure, trusted and fast exchange who currently has many promotions.
You can check it out


ANXPRO

Trading on a BTC exchange like btc-e, or bitstamp is based on the traditional bid/ask market (much like if not exactly like trading on the NYSE or nasdaq).

Trading in person and on sites like localbitcoins (and similar sites) is based on prices of exchanges (see above) and will have a premium or a discount based on the incentives of the buyers and sellers. For example if a seller wishes to sell his/her BTC quickly and receive cash quickly they may set a larger discount to the trading price on a major exchange.

Ok. I guess a key question is, can bitcoins be short sold like stocks and commodities?

Apparently it is possible, but currently difficult to do, because of the highly illiquid market. However, there are some ways. I found http://qz.com/69630/how-to-short-bitcoins-if-you-really-must/ interesting.

Not sure about this post. Generally, shorting means you gain when something goes down, buying it back at a lower price, and lose when it goes up. This is either incorrect or has a different meaning of shorting. Interesting nonetheless.

http://bitcoin.stackexchange.com/questions/242/can-bitcoins-be-sold-short-or-are-there-put-options

Note that Bitcoin's market cap is less than 2% of Apple's. When the market cap reaches a trillion dollars it will be much harder for any one entity to manipulate its price. Not that it will reach that price, but it is the hope.

I have finally gotten around to examining bitcoin and other cryptocurrencies more closely. I have followed traditional trading on the Exchanges for quite some time. My question is, how is the price of bitcoin determined? Is it like in stock and commodity trading, where it is determined by bid and ask?

This may be a key question for the long-term success of bitcoin. I realize that many on this trading discussion view bitcoin as a means to make money. However, for most people, the goal is an alternative to fiat currency, which can be inflated away at the whim of central banks. The concept behind bitcoin is that, unlike fiat currency, it has to be mined, and a limited number will ever be created. However, we already have this in physical coins, such as gold coins, which have to be physically mined and are limited in number.

The problem with valuable commodities such as gold is that the price is determined on trading exchanges, most of which are controlled by institutions with the implicit backing of central banks, such as JP Morgan. Such institutions simply "naked sell" down the prices of commodities such as gold by using enough fiat dollars to sell down the price. For that reason, the price remains low in relationship to fiat currencies, and really is not independent of the fiat currency, nor an ideal hedge against inflation.

What makes bitcoin and other cryptocurrencies different from this? If the price is determined by who has enough money to increase or decrease the price at their whim, then how would bitcoin be able to be a truly free and independent currency that can be used in the face of fiat currency inflation?

Believe me, I am all for a currency that is for the people, by the people, not controlled by any central bank. Any answers would be much appreciated!