Bitcoins

bowlhead99

The snapshot is just the "live" order book showing what orders are out there (just on that one exchange) at different prices at the point in time. The blocks are basically the volume of units that people are willing to buy from you at different prices (buyers on left at low prices) or what you would have offer to meet the price of the people offering x number of units (sellers on the right offering their holdings at high prices).

So for example at $420, there might be 100 coins that people would be willing to sell to you, while if you were willing to pay $450, you'd perhaps have 5000 coins available to buy right there and then. If you wanted to buy 10000 you could hoover up the 100 at $420 and the 5000 at $450 plus all the ones in between and then to get more you'd need to go further to the right on the order book and pay $460, $470 to get the rest of the order filled.

.It's pretty much how betting exchanges or basic stock exchanges work, there are just a bunch of people making orders with some buying and some selling and in the middle everything gets filled because a willing buyer matches a willing seller. Over on the left of the chart there are stacks of people who would be willing to buy if the price was lower, so if you were trying to sell a large volume, you could see from the order book that you might have to accept $375 instead of the mid price of $400-410 if you wanted to exit all of your x hundred or x thousand coins; you would find different people bidding different prices to take some of them off your hands.

The fact that there is a huge number of people willing to sell if the price was up closer to 420, 430, 450 etc acts as a bit of a practical ceiling to the price, because if you were willing to offer that much there would be loads of people trying to get out, and those are just the people who are willing to show their hand and leave an order visible on the market - lots more would come out of the woodwork to sell if they saw the price get higher. Similarly on the lower end, in order for the price to go back down to $350, there has to be enough sellers to clear out the buyers at those low prices above $350 and below the current price of $400-410.

That's generally how a lot of markets work. It is complicated by the fact that there are multiple exchanges where people can meet to buy and sell, so if I don't want to pay $410 to get my order filled, I don't have to use this particular exchange. I could maybe buy one here and then buy another 99 elsewhere if there was a seller on another exchange willing to trade at a lower price. Of course, to have the ability to buy up to 100 on any of two or three exchanges, I'd need to have $40k cash on hand at each of the exchanges, while to be able to sell 100 coins at the very best price across the exchanges I would need to have at least 100 coins available to deal in real time at all 3 of the exchanges.

The ability to "arbitrage" across markets (buy at $401 on one exchange and then moments later offer for sale at $402 on another) means that the mid-prices should be pretty consistent across the different main markets and not run away from each other. However in reality there will be different levels of liquidity at different times on the different exchanges.

In this respect it is like buying shares with a dual listing in London and Hong Kong, or Paris and New York ; you can pick where to buy and sell but there can be practical difficulties working with all the brokers in all the locations to do it efficiently and the few people who can do it efficiently will arbitrage away all the opportunities so that the casual punter can't really exploit any differences.

Sometimes it can be fun to dabble in fledgling markets for things where the trading marketplace is not so developed as for "proper" financial instruments, and try to read the dynamics. Ultimately that's what traders do with real investments at much bigger volumes (see other threads) but in reality there is not enough volume or sophisticated enough tracking systems for the casual punter to pick out patterns in bitcoin trades across the somewhat rudimentary trading environments.

If you like the recent news you heard and the price offered in the market, you can buy; if not, you can sell. But it is all basically supply vs demand that makes the market tick, and just like with shares, your presence as a buyer or seller on the market will, in some small way, change the price that you and everyone else pays or receives.

puk999

It all makes sense now, thanks bowlhead99.

gavina

A few people have been arguing that bitcoin is different to, say, silver and gold as an investment - because these have some underlying value from their practical use, in jewellery and whatnot.

Seems to me that things have value - in a practical sense - if they are useful to people. Gold is useful in part because it can be made into jewellery, and that is part of its value. Bitcoin is useful because people can use it for transactions. This is just as "real" a use as jewellery. The fundamental case for bitcoin is that it is very useful indeed for transactions - especially for the majority of the world who don't have bank accounts they can use to participate in the internet economy. As people use bitcoin more for transactions, its value will rise. I believe there is a reasonable chance it could turn out to be the most useful thing there is for transactions - and it will be used in a significant part of global exchange.

The following link has some interesting (though crude) analysis of how valuable bitcoins might be if they are used for a lot of transactions (and also if they are used as a store of value - another potential fundamental use). You quickly get some pretty big numbers.

Edit: not allowed to paste link, but you can google "investopedia intrinsic value bitcoin"

JohnRo

The debate at least seems to have shifted away from attacking bitcoin specifically and crypto in general, for what it is, or more accurately what was perceived, to now attacking it for what it's not, yet. It is all about volume and with that comes relative stability, whether that volume will ever materialise or be allowed to is anyone's guess but the road it's on is heading in that direction.

Very early days for the concept still and any developments and progress towards it becoming a democratic global currency will continue to be met with a lot of resistance from the establishment running the existing money pyramids.

UserJong_2

JohnRo wrote: »

The debate at least seems to have shifted away from attacking bitcoin specifically and crypto in general, for what it is, or more accurately what was perceived, to now attacking it for what it's not, yet. It is all about volume and with that comes relative stability, whether that volume will ever materialise or be allowed to is anyone's guess but the road it's on is heading in that direction.

Very early days for the concept still and any developments and progress towards it becoming a democratic global currency will continue to be met with a lot of resistance from the establishment running the existing money pyramids.

Btc needs stability in relationship to other currencies. Look how much the $ moves compared to £ or euro etc.

If website set their prices in btc they need to know the price is not going to have huge swings anymore.

Looking like the moves from now on are about the same as other currencies

bowlhead99

UserJong wrote: »

Btc needs stability in relationship to other currencies. Look how much the $ moves compared to £ or euro etc.

Well, the $ moves against the Eur and GBP exactly as much as the Eur and GBP move against the $. But yes the dollar is seen as a safe haven currency so moves a bit less negatively against a wide basket than some other currencies would. We're a long way from BTC being a safe haven!

If website set their prices in btc they need to know the price is not going to have huge swings anymore.

Agreed with that

Looking like the moves from now on are about the same as other currencies

No it isn't looking like the moves from now on are about the same as other currencies.

Year to date, Euro has moved in a band of about 10% against the dollar (1.25-1.39) and the €/$ rate is similar to where it was 2 years ago. Whereas BTC has moved in a band of about 70% against the dollar, (300 this month, 900 in January). As I posted only 6 days ago, the BTC/$ rate moved from 312 to 412 which is over 30% in less than one week and is now back down another 7%.

So it is not "Looking like the moves from now on are about the same as other currencies". GBP might move 0.5% against the dollar in the time that BTC moves 20-30%; the BTC movement is perhaps 50x the movement seen in real mainstream fiat currencies.

grifferz

It's interesting that not only have CeX announced support for Bitcoin at 30 of its bricks-and-mortar stores in the UK, but that they intend to hold Bitcoins as well.

Almost every conventional business that has so far announced support for Bitcoin is doing so through a payment processor that instantly converts them to a fiat currency.

http://www.telegraph.co.uk/technology/news/11169814/CeX-to-adopt-Bitcoin-across-the-UK.html

dealer_wins

Wow, people were pushing this $1000+ last year. That would have been a worse investment than my Tesco shares lol.

TheTracker

And it's fallen 50% in the two months since the last post. US$230 now.

dealer_wins

TheTracker wrote: »

And it's fallen 50% in the two months since the last post. US$230 now.

Still about US$230 overvalued IMO .