how does coinbase make money?

[mybitcoin101]

Hello,

I just purchased some bitcoins from coinbase.

My question...
If I sold a bitecoin at $500 through coinbase, where does that bitcoin go? Coinbase then deposits $500 into my account. They have to sell the coin(I assume) and what happens if the bitcoin goes down to $490? Does coinbase take the hit?

Thanks

[RW02]

exchanges dont sell your coin unless they have a buyer. this is why you cant sell for 500 it would simply not sell untill a person was intrested in buying it at that price. coinbase charge a fee probably 2-5% this is where they earn most of there money.

[PenAndPaper]

exchanges dont sell your coin unless they have a buyer.

except that coinbase isn't an exchange like mt.gox or bitstamp.

[odolvlobo]

In simple terms, this is how they work:

They look up the price on an exchange and add 1% to it.
They buy from the exchange.
You buy from them at the +1% rate.
They keep the 1%.

[noviapriani]

You buy at coinbase they +4% someone selling their btc they buy less -4% something like that. If a company doesn't profit it will close in no time.

[sushi]

They are the exchange platform.  They make money from the service fees of helping you buy and sell (finding the person to buy/sell) your coins.

The 1st month on the new account, the wait time is a killer, but at least you can withdraw USD into the FIAT Domestically for the Americans!!! 

[knowone]

From http://support.coinbase.com/customer/portal/questions/889644-fees . . .

per Fred Ehrsam Coinbase Agent Mar 19, 2013 12:11AM PDT

Hi,

We charge a simple 1% plus the standard $0.15 flat fee for bank transfers when you convert from USD to BTC.

Once you're in the bitcoin world, all BTC to BTC transfers are free! 

[firstlast]

Their buy price also hovers over the spot price on bitstamp. I've seen it as high as 2% over. 3% total fees.

[crazy-pilot]

Their buy price also hovers over the spot price on bitstamp. I've seen it as high as 2% over. 3% total fees.

They also have there own bitcoin buyers. They raised the price based on the demand of the buyers.

[PenAndPaper]

They also have there own bitcoin buyers. They raised the price based on the demand of the buyers.

Most certainly they are following the prices of the big exchanges. Although they make profit form the margin between bying and selling.

[SemiMolten]

They also have there own bitcoin buyers. They raised the price based on the demand of the buyers.

Most certainly they are following the prices of the big exchanges. Although they make profit form the margin between bying and selling.

^. Its always near the price of exchanges

[mvidetto]

Hello,

I just purchased some bitcoins from coinbase.

My question...
If I sold a bitecoin at $500 through coinbase, where does that bitcoin go? Coinbase then deposits $500 into my account. They have to sell the coin(I assume) and what happens if the bitcoin goes down to $490? Does coinbase take the hit?

Thanks

Don't worry, they're making plenty of money...