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Author Topic: BTC/Fiat Exchange Rates [CLOSED]  (Read 1480 times)
river
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April 01, 2011, 05:42:46 PM
 #1

OK,

It is just me or are people trading BTC against other currencies give there 'classic' Fiat Exchanges ..
for example ... 1 BTC would go for .7 USD or .5 EUR  which is the market rate for exchanging USD to EUR
HOWEVER, most people using BTC know that the USD is either dead or dying .. SO?Huh ..

shouldn't bitcoin be trading according by it's own merits against whatever Fiat is is traded against, not my Fiat market exchanges.
like if the U.S. wants it a little then the exchange would be 1 BTC to say ... eh .2 USD
but if, at the same time, the Britian REALLY wants it bad .. wouldn't it be say 1 BTC to say 5 GBP

know what I mean .. it's trading as if it's fiat against fiat .. not BTC against Fiat  .. who cares what the Fiat rates are .. it's not Fiat .. it should be trading according to it's own market value.Huh


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April 01, 2011, 06:03:18 PM
 #2

I don't get what your point is.

The phrases "trading USD against BTC", and "trading BTC against USD" describe the same action.  One uses the seller's perspective, the other the buyer's perspective. That's all. Otherwise they are both equally valid.

The rest is just a discussion about semantics.

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April 01, 2011, 06:50:13 PM
 #3

no no .. I in reference to the fact BTC is trading according to USD vs EUR prices instead of BTC vs USD or BTC vs EUR? Do you not understand?
It's inevitable. If this wasn't the case then arbitrage would quickly occur, and it would become the case.

Let's say in real life USD 2 buys you EUR 1. Now let's say that at MtGox BTC 1 buys USD 3 and EUR 1. People would simply spend BTC 2 to buy USD 6, then move their USD to a non-bitcoin forex exchange and use the USD 6 to buy EUR 2. The result would be that BTC would fall against USD at MtGox, until it no was longer profitable to engage in arbitrage.

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April 01, 2011, 06:55:28 PM
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There are more or less independant exchanges in each national currency.

For instance, when I trade bitcoins off the counter against euros, I look at the rate of bitcoins in USD but I don't really look at the EUR/USD rate.  I just make myself a grosso-modo value and give my price.  So I'm pretty sure there ARE arbitrage opportunities for motivated people.
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April 02, 2011, 12:01:40 PM
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There are more or less independant exchanges in each national currency.

For instance, when I trade bitcoins off the counter against euros, I look at the rate of bitcoins in USD but I don't really look at the EUR/USD rate.  I just make myself a grosso-modo value and give my price.  So I'm pretty sure there ARE arbitrage opportunities for motivated people.

There are arbitrage opportunities, but they arise mostly where one currency is lightly traded - creating a risk that before you manage to close out the position the rate has moved against you.

I'm firmly of the belief that arbitrage (or the potential for arbitrage) is what makes currency pairs in different markets converge. So the BTC-USD price at MtGox and the BTC-EUR price at BTCex will inevitably reflect the global USD-EUR price. There may be small windows where this isn't the case, but arbitrageurs will exploit that, causing the window to close.

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April 02, 2011, 12:16:15 PM
 #6

That's the point tho isn't it.  You trade BTC against EUR .. and what to you do .. you do with the USD value THEN convert TO EUR ..

you don't put BTC against EUR .. you put EUR against USD THEN convert to BTC  instead of trading directly BTC against EUR at its desired market value.

Not exactly.  It's not that simple.  I make some kind of a mix.
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April 02, 2011, 08:55:38 PM
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So the BTC-USD price at MtGox and the BTC-EUR price at BTCex will inevitably reflect the global USD-EUR price.

Not true ... BTC is global and there are about 10 TIMES more people on the rest of the plant than in the U.S. plus the U.S. dollar is practically worthless now.  The sheer amount of people that will be using bitcoin on the rest of the planted dwards the US market .. so it should NOT be put against a dead/dying currency that is no longer accepted in so many nations (including large parts of it's own)

It should be used as a currency of it's own .. but for those more interested in Fiat it should be traded at it's LOCAL value, not the U.S. value.

I'm noticing also .. another trend I find weird .. and kinda disturbing ... everyone that buy bitcoin asks how many bitcoin for X Fiat .. as if the value of Fiat is static and bitcoin changes ... shouldn't that be the other way around .. if your using bitcion as your primary currency .. then IT's value is status and FIAT should change ... know what I mean.
There's no such thing as local value. Forex is a global market. If it's possible for someone to profit from arbitrage, they'll do it.

I appreciate that you regard the USD as dead or dying. I feel much the same way about my own currency (GBP). But we're a small minority in a vast, global and free market. Forex is the largest and most liquid market in the world: last year the daily turnover was $4 trillion. That dwarfs bitcoin.

It's usual in forex to consider how much one currency buys. For example, in USD trades they're typically quoted in terms of how much non-USD can be purchased (the exception being GBP, for historical reasons). It's the same with BTC: because we tend to regard that as the more important of the two pairs, we consider how much of the other currency we can purchase for 1 BTC: 1 BTC = 0.7905 USD, 1 BTC = 0.5804 GBP, etc. I don't see that as a bad thing.

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