Topic: True market price of bitcoins = $20? (Read 5030 times)

I was serious ... because I didn't know better

Nice pic.

I've tried to sell some coins and got scammed. The buyer just said that someone else got access to it's account and bought these coins. So these prices include a huge risk.

I bet the paypal will be reversed by the buyer on this one !

It's even worse than that.
You just can't make such assumptions based on a single or a few cases.
If i give you one dollar for free (clearly not market price) , how does that lead to a blanket statement about the whole economy?

The problem is at the data acquisition level and does not touch any theory as the theories are based on aggregates.

A few sales of bitcoins at a price much higher than on the exchanges does not mean the market price is "wrong".

http://en.wikipedia.org/wiki/Demand_curve

Almost makes me want to sell mine on Ebay.

Damn!

Goatse postcards, too.

No amount of convenience is worth an ass raping like that!

Well, I guess you can't rape the willing, but that is absurd! 

Arbitrage bitchez! Seriously, it would be worth it to sell a couple BTC, 1 at a time and see how much scamming there really is. Probably not gonna get rich doing it, but it could be a fun way to make a few dollars on the weekend without having to physically ship anything.

Edit: $96 for 2 BTC? LOLZ
http://www.ebay.com/itm/2-0-Bitcoins-/251163099537?pt=US_World_Coins&hash=item3a7a7cc191

We're talking about transactions for 1 or 2 bitcoins.


Good point. 

Either way, it's still on my to-do list to check out after I read the taxation rules & make my BFL video & investigate incorporating a mining company... man my to-do list just never seems to end! 

~ciao

As an old friend once told me about ebay bitcoin prices:

"Shills be shillin'"

Premise: The market place with the lowest liquidity is most efficient.

It's still cheaper than the "$20+" per coin offered on the bay!  

I understood the criteria in the post I quoted to be easy, not cheap.

BitInstant fees are way too high especially if you are trying to buy thousands of dollars worth of BTC.

I don't see how it could get much easier than buying bitcoins through BitInstant.

Not really. They used a stolen card or account and the real owner says so and gets the money back.

No, existing bitcoiners getting scammed would accelerate and the bad press would scare off new users.

For the avergae person, the current purchasing methods are just a pain the arse. Even as an "educated user", I don't buy coins because it is a pain in the arse to set up.

An bitcoin wallet is easier to establish and using an existing medium to purchase them (ebay + paypal), is more user friendly. I can already hear the cries of anguish over such statements but take a step back and consider the target user. There is still a lot of people that find IT things culturally difficult, such as;
1. internet banking
2. installing applications
3. understanding a virus

Not everyone grew up with a keyboard in their mouth.

Now if we could get a bitcoin wallet widget to interface with more user friendly methods such as direct paypal then adoption might accelerate (example only)

I doubt PP will get to understand it, and even worse, admit it as a real good traded.. BTC are kind of their wrost competitor !! Will they get acknoledge BTC, and admit it's a currency or tradable good ??  Let me doubt about it !

crazy ebay prices lol

maybe for USA but in EU is 30 working days, also chargebacks are not allowed if you need to confirm the purchase via one time use code sent on mobile phone, enabled by default for any purchase online above 50 EUR

180 days?

you can sent the coins only after the charge back time window is closed

But then you have an address to mail tons of steaming dog shit to.

This doesn't protect you at all.

The problem with chargebacks is when someone uses a stolen creditcard to pay for purchased via paypal. It all looks good until a week or two later when paypay refunds the transactions (After the creditcard is reported stolen) and you've already mailed your paper wallet.

If, as you say, fraud takes place, then a lower value is fully justified.

Wait, so if I buy a $5 CAD face value silver maple coin or a $1 face value silver american eagle coin, the seller is violating that policy?  It's legal tender..

Shouldn't I be able to send the buyer a printed bitcoin certificate?

I personally think they are a little undervalued considering the amount of fraud that most certainly takes place.

...until the user files a Paypal dispute, and you lose because you're selling Bitcoins.  I'm not sure that I would count on physically shipping something along with the Bitcoins either - if the customer claims a misrepresentation of the item for sale, Paypal could still very well side with them.

"Price: US $36.15"


LOL!
I wonder how many he'll actually get sold at that price.

This guy is doing it like this:

http://www.ebay.com/itm/One-Cent-0-01-and-1-free-Bitcoin-1-0-BTC-Digital-Currency-sent-instantly-/320999754704?pt=LH_DefaultDomain_0&hash=item4abd138bd0

I might have to try some Ebay selling again.

PP can still do a charge back if the the acc owner claims he was hacked i think.

and you can only sell so much on ebay. its not like Ebay is trading 10K a day of bitcoins 

i try to sell once and the guy who won never paid, got scared of charge backs and never tried to sell a bitcoin on ebay

https://www.bitcoinary.com/    is good.

Hence the high price on Ebay necessitated by any research of the buyer involved and possibility of fraud by the buyer. People seem willing to pay it to get bitcoins.

I meant either way the buyer could just say you shipped them a rock, piece of paper, or nothing. And no matter what paypal is going to refund the buyer. Once they hear "bitcoin" they are going to put their fingers in their ears and say, "la la la paypal policy lalala we are sorry ebay buyer protection lalalalalala"

Advertise physical bitcoins.

Bitcoin is a commodity, not just a currency. By that rule, silver Eagles and other coins with face value would also be banned.

Or the buyer could just say you sent them a blank piece of paper...

1 make a new wallet
2 print in on paper
3 put funds on that wallet
4 sent paper via mail keep prof of sending mail
5 no charge backs can be done anyone who want to charge back scam you is fucked

Under "Prohibited Activities", the PayPal "Acceptable Use Policy" states:

So when you try to show proof that you delivered the bitcoin currency, you establish that you are in violation of the PayPal User Agreement 9.1.a.

You're right. Mtgox doesn't represent the aggregate bitcoin market. But it represents a bigger chunk and closer approximation than any other market. The only way to get a more accurate picture of the 'true' market price of bitcoin is to do a weighted average with other exchanges. Since they are all within a few percent of the mtgox price, and they all have a much smaller weighting due to the lower volume, you are not going to gain much by doing the extra calculations to include them. So people don't.

If 99% of bitcoin purchases take place within a fairly narrow range around $12 then that is the market price.

I guess the point is that it is not mtgox that is pushing the price of bitcoin down, it is ebay that is artificially pushing the price of bitcoin up.

There is no single or 'true' price of anything.
Price is always a bandwidth unless it has been somehow fixed.

But he's still selling 80% at $20.

The pain-in-the-butt quotient has to be added to any transaction. Mtgox gets theirs via the exit fee. The Ebay seller is getting it by charging a premium, etc. Perhaps a p2p, decentralized exchange might help all that someday. ; )

Yeah I was trying to hit edit and hit delete.  Well glad at least someone saw it (because I don't feel like trying to recreate it).

DeathAndTaxes, your last post was awesome, but before I could quote it, it was removed or something.

Eitherway, thanks for the awesome explanation.  I will let you know if I get some fraud stats after selling on ebay. 

I need to read the taxation and spend some time setting up BTC sales on ebay this weekend if I get the change.

ciao

No.  In theory it could but PP "investigation" doesn't really care.  They are more like "checking the block" and looking for signs of blatantly obvious fraud.  There goal isn't to protect you but merely to protect PP brand/image.  They have no interest (or time) to do any detailed research of authenticating emails, learning about the blockchain and how that can prove funds were sent.

I'd send them a paper bitcoin via the mail as proof of sale.

Because it isn't a large number of people.  Price discovery is the aggregate of all buyers and sellers.  Just because a tiny (i.e. rounding error) of trades occur at 50%+ over the median price doesn't mean that is the "true" price.  Even if you want to say "exchanges are too hard and don't represent real price" in our fastcash4bitcoin service we have bought over 80,000 BTC and on average pay about 4% LESS than MtGox.  For someone looking to sell coins for "cash" it is about as easy as it gets.  Fill out a web form, send coins, get some cash.   On the other end you have BitInstant selling coins for ~5% over MtGox price.  I don't know if they publish any sales volume numbers but my SWAG would be in the hundreds of thousands of BTC.

So here you a group of users who for one reason or another don't want to use an exchange and the prices ranges +/-5% (maybe +/-50% in extreme cases) of MtGox.   50% over is simply an outlier; outliers happen but it doesn't mean you should throw out the 99.5% of trading data and focus on the 0.5%.

More than "true" price ebay selling for >50% over MtGox simply shows an inefficient market.  In a free market sellers should attempt to get the highest possible price.  Competition is low on ebay and that means higher margins, if volume grows more sellers will join and that will drive down the prices.  Still he seller isn't getting a net price of 50% over MtGox.  Part of what you are seeing is the transaction cost.   Some back of napkin numbers, say seller loses 20% in fraud and ebay/PP fees are another 10%.   So even with no profit the markup would have to be ~30% over MtGox.

The truth is that people are willing to pay $20+ for bitcoins on the largest market on the internet. To say anything else wouldn't be true.

That makes sense.

And for PP chargebacks ... if you show Paypal the ebay mails with the buyer's code and then the transaction details from blockchain explorer, isn't it proof enough that you have delivered the goods?

No it doesn't  
Just because you want something to be true doesn't make it so  

This is about a year old. I have no idea otherwise:

http://reviews.ebay.com/2012-IRS-TAX-LIABILITIES-FOR-INTERNET-amp-EBAY-SELLERS?ugid=10000000131804104

Well that helps me rearrange my To-do list.

1) start selling Bitcoins on Ebay
2) anything else

Interesting...

Mind rehashing the taxation questions.  Would there be any tax on these transactions?  Assuming I sell from Cleveland, Ohio on Ebay and the buyer is from anywhere in the world... does it matter where they are from?

Remember that old joke about people not being able to program their VCRs? It's not a joke.

The question remains that if large numbers of people are willing to pay $20+ per btc in a mass market environment, why is the Bitcoin community
going by a price set on an exchange populated by a relative few comfortable traders, bots and people trying to move their .573 btc fortune?

Sorry but not knowing any better is no excuse to pay $28 for 1 BTC

http://www.ebay.com/itm/15-0-Bitcoin-BTC-Gift-Card-/110951940958?pt=US_World_Coins&hash=item19d540435e

2 sold 15 BTC at $28 a pop.

Way to fishy, considering the fact if you know what a bitcoin is, and you know how to find them on Ebay, you've probably entered a site that shows the prices, or forums like these, guaranteed.

If paying almost 3x the value, because gox is to hard, I need to find these people and sell them stuff.

Because mtgox and other methods are a pain for many and ebay is a known entity. Some folks also might not know any better.

ADD: If people are willing to pay $20, it shows a truer price than what's reflected on the exchanges.

I was looking at that yesterday, and I thought about why this is.

1. They're limited accounts they cant take the funds off, but can spend on ebay?
2. They're hacked accounts?
3. They plan to chargeback the PP?

Any ideas on why people are paying $20+ a pop when they can get for $9 cheaper?

As people are willing to pay $20 for a bitcoin on Ebay, perhaps the exchange prices aren't close to real world prices:

http://feedback.ebay.com/ws/eBayISAPI.dll?ViewFeedback2&userid=electronics101&ftab=AllFeedback&myworld=true