Bitcoin Forum

In any case, they just only simply buy and sell, there is no leverage and other financial derivatives on exchanges, like bitstamp, lakebtc and etc. how do they profit it? and its only provide bitcoin service on them, even lakebtc trading fee is free for CNY, are they a charitable organization?

I'm not an expert but those are my 2 cents; I think that exchanges proft from ads and trading fees mainly.

They have withdraw and deposit fees too.

But the chinese exchanges had no trading fee for a long time(not sure if it is true today), how they managed to survive? Can't imagine withdraw and deposit fees alone making an exchange viable.

The fiat withdraw fees of Chinese exchange huobi/okcoin/btcchina are around 0.4-0.5%. If you trade in bitstamp, let's say to buy bitcoins and withdraw btc. You need to deposit fiat first, Bistamp charge you 0.1% deposit fee, assuming you are in highest trading fee discount class 0.2%, withdraw bitcoin from Bitstamp is free. For the person selling bitcoin to you in Bistamp, assuming that person is also in highest trading fee discount class 0.2%. So Bitstamp charges 0.1%(fiat deposit fee) + 0.2%(your trading fee) + 0.2%(trade fee of the person) = 0.5% for a pair of trade made by you and the person selling you bitcoin.

Apparently, Chinese exchange earns almost the same as the Bitstamp earns from trade. Also, Chinese labor is much cheaper than English labor!

The exchanges profits from fees (deposit,witdraw and trading)

In a nutshell: Fees when you buy/trade, and withdraw fees. I have yet to find a place that has a deposit fee.

And yeah, they make a lot of money. Lots of it.

Withdrawal and/or transaction fees, they will earn from these fees.  8)

If they will not have profit, they will not do this business :)
They have a few ways to make profit, from their internal fees, from difference in prices when you buy and sell currency, from website ads etc.

I don't think the deposit/withdraw fees add up to very much and these fees are likely close to the actual costs of doing these functions. The main source of revenues and profits that exchanges have are the trading fees. These can easily add up and many traders will trade into and out of positions several times per day, allowing an exchange to earn their fee on every trade.

Ads and fees only if they are legit.

when the alt scene wasn't dying like now, a good profit was coming also from voting

Zero fees Chinese exchanges make most of their money by trading against their customers (stop loss farming, front running etc.). If you don't think this is happening in an unregulated Chinese exchange you are insane.

Exchanges have fees for every transaction, they get 1% or so. Now 1% of 10.000 is 1000$, so they make money based on that.
Also, some have a withdraw fee

Bingo. Id back that most "reputable" exchanges are involved too. Price fixing and market distortion is too easy and attractive an opportunity to forgo

Brokers that trade against their customers are called bucket shop. People should avoid this kind of exchange as the price they quote you is arbitrary rather than market rate.

Those firms build a huge userbase. That in itself is incredible valuable. Wouldn't wonder if a company like BTCchina is sold for >100 mlillion USD and the buyer introduces fees longterm.

do you mean its shady trading?

Bitstamp and btc-e are only charging user fee on matched trade.

I have not heard allegation of them trading against their customers.

Yes, you have heard allegations - in the above posts. Of course, these are really just suspicions, but they were presented in a suggesting way.

In a nutshell, exchanges profit from trading fees. They usually do not make much profit off of withdrawals. Some of the exchanges make even more money off of using the information they have at their disposal to their advantage.

To the best of my knowledge there hasn't been any allegations or report on their trading against customers.

Most of the exchanges make money through transaction fees, which can be pretty big.
and even the difference between buying and selling.

you are thinking about service provider, not exchanges...

Some exchanges do use their own money to trade bitcoin; it is rumored that chinese exchanges do this a lot. He is however correct to say that exchanges to primarily make their money from trading fees.

in the stock market, a lot of buying and selling currencies of various countries, there is no buying and selling of goods there, how do you think can profit in the stock market?, of course, the gains from the difference between currency sold and bought there, just like bitcoin exchange, hopefully you understand with my explaination ..  ::)