Bitcoin Forum
December 04, 2016, 08:28:18 PM *
News: To be able to use the next phase of the beta forum software, please ensure that your email address is correct/functional.
 
   Home   Help Search Donate Login Register  
Pages: [1]
  Print  
Author Topic: Calculating the BTC/USD Exchange Rate  (Read 2785 times)
Threshold
Member
**
Offline Offline

Activity: 88



View Profile WWW
June 06, 2011, 11:19:09 PM
 #1

I want to determine how many bitcoins to charge someone for some goods.

What is the accepted, fair manner for determining the exchange rate?

For example, right now at mtgox it says:

Last Price: 18.55High:19.23Low: 16.375Volume: 56399

It doesn't really say a concrete exchange rate -- just the ranges from today's trading and the price of the last trade they processed.

Is there somewhere else I should look?

Earn free bitcoins at:  http://www.freebitcoins.org/4296
1480883298
Hero Member
*
Offline Offline

Posts: 1480883298

View Profile Personal Message (Offline)

Ignore
1480883298
Reply with quote  #2

1480883298
Report to moderator
1480883298
Hero Member
*
Offline Offline

Posts: 1480883298

View Profile Personal Message (Offline)

Ignore
1480883298
Reply with quote  #2

1480883298
Report to moderator
Advertised sites are not endorsed by the Bitcoin Forum. They may be unsafe, untrustworthy, or illegal in your jurisdiction. Advertise here.
1480883298
Hero Member
*
Offline Offline

Posts: 1480883298

View Profile Personal Message (Offline)

Ignore
1480883298
Reply with quote  #2

1480883298
Report to moderator
1480883298
Hero Member
*
Offline Offline

Posts: 1480883298

View Profile Personal Message (Offline)

Ignore
1480883298
Reply with quote  #2

1480883298
Report to moderator
TiagoTiago
Hero Member
*****
Offline Offline

Activity: 616


Firstbits.com/1fg4i                :Ƀ


View Profile
June 07, 2011, 12:03:05 AM
 #2

To convert USD to BTC divide the USD value by one of those 3 values (18.55, 19.23 or 16.375), or a value between the min and max; to convert BTC to USD multiply the BTC value by the rate you choose.

Or you want somthing like the "official" exchange rate from 'Gox?

(I dont always get new reply notifications, pls send a pm when you think it has happened)

Wanna gimme some BTC for any or no reason? 1FmvtS66LFh6ycrXDwKRQTexGJw4UWiqDX Smiley

The more you believe in Bitcoin, and the more you show you do to other people, the faster the real value will soar!

Do you like mmmBananas?!
Threshold
Member
**
Offline Offline

Activity: 88



View Profile WWW
June 07, 2011, 12:11:07 AM
 #3

I guess I was hoping that there was a community-accepted concept of a fair exchange rate.

Otherwise, as the buyer I'd want a big exchange rate and as a seller I'd want a small exchange rate.

I had hoped there was something "fair."

As you said, I could take the average of the high and low -- but that doesn't account for outliers -- atypical trades.  I suppose the median price would be fair -- but that'd be a lot of data mining to calculate.

Earn free bitcoins at:  http://www.freebitcoins.org/4296
acamus
Newbie
*
Offline Offline

Activity: 28


View Profile
June 07, 2011, 01:14:47 AM
 #4

use geometric mean of high and low

sqrt(high*low)

pretty common and about as 'fair' of a rate you're going to get. I think many merchants sell in another currency and accept btc as payment given market prices.

Short Bitcoin  (http://forum.bitcoin.org/index.php?topic=12536.0) if you dare.
http://www.tradebitcoin.com/
http://oneminuteslow.com/bitcoin/100-20.png (http://forum.bitcoin.org/index.php?topic=8895.0)
15V8JNvmvuWnRF3r6hfTyLL1ukyfp
hello_good_sir
Sr. Member
****
Offline Offline

Activity: 246


View Profile
June 07, 2011, 01:18:57 AM
 #5

Keep an "average" price.  Every time a new price comes out average this price with the old price.  You will end up with a price that cuts fluctuations in half.  If you want to further reduce fluctuations make it a weighted average, with only 10% or even 1% coming from the latest price.

While writing this someone mentioned the geometric mean, I *love* the geometric mean.  I use it for situations where you are selling to a friend instead of a store.  It is a way for the savings to be proportional.

Want to buy a 2004 Ford Taurus with bitcoin?  I live in Maryland.  Send me a private message if interested.
Threshold
Member
**
Offline Offline

Activity: 88



View Profile WWW
June 07, 2011, 01:57:11 AM
 #6

It sounds like the geometric mean sounds like the winner.

Earn free bitcoins at:  http://www.freebitcoins.org/4296
timmo11
Newbie
*
Offline Offline

Activity: 24


View Profile
June 07, 2011, 02:08:04 AM
 #7

While writing this someone mentioned the geometric mean, I *love* the geometric mean.  I use it for situations where you are selling to a friend instead of a store.  It is a way for the savings to be proportional.

How come it is fairer than the arithmetic mean?
TiagoTiago
Hero Member
*****
Offline Offline

Activity: 616


Firstbits.com/1fg4i                :Ƀ


View Profile
June 07, 2011, 10:12:08 PM
 #8

I would like to learn the pros and cons of each as well

(I dont always get new reply notifications, pls send a pm when you think it has happened)

Wanna gimme some BTC for any or no reason? 1FmvtS66LFh6ycrXDwKRQTexGJw4UWiqDX Smiley

The more you believe in Bitcoin, and the more you show you do to other people, the faster the real value will soar!

Do you like mmmBananas?!
jerfelix
Sr. Member
****
Offline Offline

Activity: 266


View Profile
June 07, 2011, 10:34:46 PM
 #9

The geometric mean is a reasonable simple solution to the problem.

If you want to be really analytical, you would look at the order book and determine how much it will cost you to convert bitcoins to USD (or whatever currency you are considering).

Two things worth noting - this method could actually be higher than the geometric mean (if the current price is close to the high of the day).  And the conversion rate really depends on how many Bitcoins you are converting.  Just consider this:  If it's 1 BTC,  you are going to get a higher in USD than if you are trying to convert 10,000 BTC.

So look at the order book chart linked above, and look up the number of coins you are trying to convert on the side (Y) axis.  Then slide your finger over to the orange line, and that will give you a minimum price.  And where the orange ends (to the right a little bit), that will give you a maximum price.  Look at the area that is contained in the graph of orange, between the minimum and maximum, and take the arithmetic mean of the minimum and the maximum.  And that's your answer. (of course, you can figure this out mathematically, and not just by eye-balling it.)

That is the price that you KNOW you can offload the coins for, at that moment in time.
iya
Member
**
Offline Offline

Activity: 81


View Profile
June 07, 2011, 10:42:39 PM
 #10

How come it is fairer than the arithmetic mean?
I would like to learn the pros and cons of each as well

The geometric mean is the "correct" mean for ratios, which prices are. It's the arithmetic mean on the log-scale:




Which chart looks more "correct"?

jerfelix is right of course: As a seller you're interested in the best "bid", and as a buyer you're interested in the best "ask". bitcoincharts.com has a calculator for larger orders, on the Market Depth page.
Pages: [1]
  Print  
 
Jump to:  

Sponsored by , a Bitcoin-accepting VPN.
Powered by MySQL Powered by PHP Powered by SMF 1.1.19 | SMF © 2006-2009, Simple Machines Valid XHTML 1.0! Valid CSS!