Topic: please explain the exchange rate for me - page 2. (Read 1855 times)

But who decide what gold is worth ? Only the collective mind of people willing to buy gold.

On the contrary, the rate is only defined by what people are willing to pay, and there is no equation for it. There is no external truth of the worth of a BTC or a dollar, or gold.

The rate of € to $ is not defined by banks for example. It's defined by sellers and buyers of these currencies.

It comes from what people think BTC can or will allow to afford now or in the future.
If I knew for certain that BTC will be worth 100$ next month, I would be willing to buy some from you at 50$ or 70$ a piece. This is what makes the rate.

why do they chose to pay maximum that much and not that much? I am a little familiar with the stock markets.

the rate (and especially rate makers) is the key for any monetary system, especially for the one that is not self sufficient like bitcoins
(I define self sufficient as the one where I can boy whatever I want for the currency I have: any product or service, while I can buy only what is sold on bitcoin market)

so I imagine if I came to the US govmnt and say hey guys, I have 100 bitcoins and I want to exchange them to US dollars, in ideal world they would say: ok fine, what is your 100 bitcoins worth?
and then when we know how much of something in common we can buy (a gold?) for US dollars and bitcoins then we (kinda) know what is the rate bitcoins to US.
This number is pretty mathematical and has nothing to do to what people are willing to pay in dollars for my amount of bitcoins. The peoples wish to pay that and that is only deviation from the number
I referred above, and yes you are right: nobody buys the bitcoins from me if the number is deviating too far from the original rate which is usually set by the local bank that
guarantees the fair exchange via gold or silver or electricity or anything else that has value for both side.

So the questions is still open: where the bitcoins rate comes from?

The price on the chart is the maximum price someone is willing to pay for a bitcoin. Currently people will only pay 19 to 20 Dollars per bitcoin and not 100 $. (Of course it is a little bit more complicated but this is the principle). Search for stock markets if you want to learn more about this topic.

so on one hand if I play my game:
the rate is 10 bitcoins2 for a gram of gold
the rate is 10 bitcoins2 for amount of dollars I can buy the gram of gold for.

if I play real bitcoins game
I cannot see why the rate is what it is https://www.mtgox.com/trade/megaChart

oh.. ok. Are you trying to say that the other people like me will pay their dollars to me if I wanted to sell the bitcoins?
So who says that the exchange rate is https://www.mtgox.com/trade/megaChart ?
why does the rate in between 20 and 19 instead of .... 100 and 200?

As far as I understand, Mt. Gox is not buying the coins but is just the broker. So if a lot of people want to sell their bitcoins2, the price will fall since there are not enough buyers.

hi guys,

I know the question I am asking is marginal and the situation like that is not likely to happen, although

let's put it this way:
1. If I had a 1000 gram of gold, I imagine I could "generate" on my own alternatively to your project let's say... 10000 bitcoins2
2. and when people come to me and ask me dollars or euros I go ahead and sell my gold and give them requested in a proportion of what their amount of bitcoins2 is.
3. if dollar falls down due inflation the bitcoins2 is still ok because it is supported by my own gold instead
4. if for some reason my project with bitcoins2 is to be closed and all people who I transfered bitcoins2 to come to me at once and say we want dollars man!.. then I sell ALL the gold and give them what they
ask. We are even, independent and free to go by then

on the other hand:
1. I have the bitcoins generated (mined) according to some algorithm
2. or I bought them from the person
3. and if all  (I mean it: ALL) of those people who has bitcoins come to the  Mt. Cox at once in very same moment of time

will they receive the dollars/euros/pounds/etc..? 
how come  Mt. Cox provides them what they want if the bitcoins are not based on something that can easily traded at once?
The  Mt. Cox has to sell something valuable and this is no doubt can be done (e.g. for closing the project).
The question is what is it that  Mt. Cox will sell to pay back all the people involved in this market?
what the bitcoins rate is based upon?

So far I have not found the answer on this question on your docs and this is making me suspicious whether I should jump in your lake or I should not

Thanks a lot
dewman