True market price of bitcoins = $20?

[Severian]

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

[farlack]

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?

[Severian]

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

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.

[farlack]

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

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.

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.

[Severian]

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

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?

[kjlimo]

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?

[Severian]

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?

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

[Shadow383]

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

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.

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

[bobitza]

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

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?

[Severian]

Just because you want something to be true doesn't make it so  

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.

[DeathAndTaxes]

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?

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.

[Severian]

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?

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

[DeathAndTaxes]

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.  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.

[kjlimo]

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

[DeathAndTaxes]

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).

[Severian]

Price discovery is the aggregate of all buyers and sellers.

Better said than I was trying to say by starting the thread. Mtgox doesn't represent the aggregate and has actually become a cinderblock on Bitcoin's price discovery. I know we're still early in the game but it seems that many of us here are already willing to settle on Mtgox as a central arbiter when it seems that it's actually keeping the price depressed.

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.

I think we'll see a rise in what are now rounding errors. When people first come across Bitcoin and want to buy some, Mtgox is one of the first dirt roads they run into. Most of the new incoming bitcoin users won't want to have anything to do with it due to ID and paperwork. Some will find you, a few will find me. The rest will keep going to Ebay and similar places.

If the seller loses 20% in chargebacks and fraud that means he is collecting ~20% over MtGox.  (Note: numbers are just examples to show high processing costs can distort market prices).

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. ; )

[mobodick]

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

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

[Pteppic]

Mtgox doesn't represent the aggregate and has actually become a cinderblock on Bitcoin's price discovery. I know we're still early in the game but it seems that many of us here are already willing to settle on Mtgox as a central arbiter when it seems that it's actually keeping the price depressed.

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.

[DannyHamilton]

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?

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

No.  In theory it could but PP "investigation" doesn't really care.

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

You may not use the PayPal service for activities that . . . relate to transactions that . . . involve currency exchanges

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.

[myself]

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.  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.

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