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 Author Topic: Converting value between currencies.  (Read 3642 times)
divergenta
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 April 07, 2011, 08:45:24 PM

First of all I have to point out that I'm a total noob on the subject of economics but I am eager to learn more.

If I have understood it correctly the value in USD of 1 BTC is determined of how much USD poeple are willing to pay for 1 BTC, right?
Well, I'm Swedish so it makes more sense to me to know the value in SEK since I'm more familiar with it.

Right now, according to bitcoinwatch 1 US dollar is worth 1.35 BTC.
And 1 USD is worth 6.30 SEK

Hence, If I'm not mathematically retarded, the value of  1 BTC = 4.67 SEK.  I tried to do the same thing using Euros and got the result 1 BTC = 4.74 and my guess is that I would get an very similar but a slighty different result if I tried to do the same thing using Russian ruble or pure gold.
As I see it, this can be used as a close approximation for me to get to know of the value of a bitcoin in SEK.
But is it really meaningful at all so speak of a value of BTC in SEK if nobody are buying bitcoin with SEK? If, as I guess, the actual value is determined by the price. ( I, for example tend to convert my money to USD to buy bitcoins.)

But my method of approximating the value have the obvious flaw that even though the relationship between the value of BTC and USD the value relationship between USD and SEK can fluctuate which makes it kind of "wrong" and unstable.

I'm wondering if there exists a way to calculate the value in a bettter and more accurate way? Or is it simply impossible without anyone buying BTC with SEK?

As I said before I know very little about economy and would gladly appreciate any help on this matter. I would also like to know more about currencies (and how you convert between them and so on) and if someone has any good book to recommend I would be grateful.

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Binford 6100
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PGP OTC WOT: EB7FCE3D

 April 07, 2011, 09:09:18 PM

may i dude you?

dude,
you come from country with the oldest central bank, thus banking and money creation has the longest tradition known to men there where you come from and you ask in an internet discussion forum basic things about it?
you no troll, right?

in the top right corner of each page is the search box. huge amount of personal experience, opinions, recommendations and discussions have been written in this forum. just search. be active, do your homework.
will you really read whole books on the topic?

as for the value, i would pay 50 sek for 10 bitcoins. i would even mail the cash to you, just to get some bitoins and get rid of the femtio kronor banknote. to mess with you and your calculations i would even pay 70 (have a tjugo banknote as well that i want to get rid of). how would you calculate the value from that trade? who will bear the costs for envelope and post stamp? can you be trusted to send money? will you send bitcoins first? who is the market operator here?
you get different price on irc when trading directly with people, different price on bitcoin-central if it matches a trade this week, different price on mtgox and each of the trading options has its own ups and downs.

you can get bitcoins for work or a favor for someone. how would you value that? in your hourly rate in sek / time to complete that task? no book can give understanding of how people relate to money, value. let's see what you get recommended for reading

for the following answer i would like an answer (the above ones are rhetorical)
"how do you cope with the fact that bitcoins have no intrinsic value?"

read they are not from gold/silver, they were not issued by any recognized bank, have no legal backing forcing them to be accepted for debt or tax payments etc. purely mutual agreement between two parties in a transaction. why to exchange sek, eur, us\$, anything for a string with nice mathematical characteristics and an entry in a blockchain?

You can't build a reputation on what you are going to do.
divergenta
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 April 07, 2011, 09:32:48 PM

I'm honestly sorry if my questions (in combination with lack of good language skills?) made me look like a troll. That wasn't my intention at all.
I tried to point out that I have very little knowledge in economy and becuase of my lack of knowledge the need to ask stupid questions rises.

My question was whether there actually was a meaningful way to convert value of a bitcoin to a currency unconnected to bitcoin.. That was the question, I was not claiming that it was the case. or that such a method existed.

But because becuase of my lack of economical knowledge and curiosity I just wanted to know if it could exist in a theoretical and practically meaningful way.

Apparently not. Anyway, thank you for your reply and I yet again apologize for my stupidity.
mndrix
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 April 07, 2011, 09:36:39 PM

I think your calculations are meaningful.  You can convert your SEK into USD and then into Bitcoins.  There may be some exchange fees in there, but roughly your calculation would hold true.
epii
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 April 07, 2011, 10:26:48 PM

may i dude you?

dude,
you come from country with the oldest central bank, thus banking and money creation has the longest tradition known to men there where you come from and you ask in an internet discussion forum basic things about it?
you no troll, right?

in the top right corner of each page is the search box. huge amount of personal experience, opinions, recommendations and discussions have been written in this forum. just search. be active, do your homework.
will you really read whole books on the topic?

as for the value, i would pay 50 sek for 10 bitcoins. i would even mail the cash to you, just to get some bitoins and get rid of the femtio kronor banknote. to mess with you and your calculations i would even pay 70 (have a tjugo banknote as well that i want to get rid of). how would you calculate the value from that trade? who will bear the costs for envelope and post stamp? can you be trusted to send money? will you send bitcoins first? who is the market operator here?
you get different price on irc when trading directly with people, different price on bitcoin-central if it matches a trade this week, different price on mtgox and each of the trading options has its own ups and downs.

you can get bitcoins for work or a favor for someone. how would you value that? in your hourly rate in sek / time to complete that task? no book can give understanding of how people relate to money, value. let's see what you get recommended for reading

for the following answer i would like an answer (the above ones are rhetorical)
"how do you cope with the fact that bitcoins have no intrinsic value?"

read they are not from gold/silver, they were not issued by any recognized bank, have no legal backing forcing them to be accepted for debt or tax payments etc. purely mutual agreement between two parties in a transaction. why to exchange sek, eur, us\$, anything for a string with nice mathematical characteristics and an entry in a blockchain?

We have had some fairly ignorant and argumentative newcomers on here.  divergenta seems intelligent and respectful.  Don't bite the noobs.
Binford 6100
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 April 07, 2011, 11:18:14 PM

I'm honestly sorry if my questions (in combination with lack of good language skills?) made me look like a troll. That wasn't my intention at all.
I tried to point out that I have very little knowledge in economy and becuase of my lack of knowledge the need to ask stupid questions rises.

My question was whether there actually was a meaningful way to convert value of a bitcoin to a currency unconnected to bitcoin.. That was the question, I was not claiming that it was the case. or that such a method existed.

But because becuase of my lack of economical knowledge and curiosity I just wanted to know if it could exist in a theoretical and practically meaningful way.

Apparently not. Anyway, thank you for your reply and I yet again apologize for my stupidity.

practically all used conversion services solved the problem based on the mtgox exchange rate. as mtgox is the "biggest" exchange, it's exchange rate is taken 1:1 mtgox dollar = us dollar for most calculations.

1) web based converting of bitcoin exchange rate to other currencies uses the api from yahoo finance or very similar financial web site and calculates the value in other currencies based on the exchange rate of us dollar to the currency of choice. search the forum for "bounty 50 convert"

2) coinpal.ndrix service uses an 24h average instead of the last sell price (published his code as perl module)

both approaches are based on the same datafeed but use different method of calculation.

there maybe 5 other exchanges that publish the data (currency, exch.rate, volume) and the http://bitcoincharts.com/markets/ collects the data. I do not know any webbased btc calculator that would weight their rates.

i might owe an apology to you. your questions are no way stupid. it is just too much asked.
and/or i suck at explaining.

the original question boils down to "how to eat an elephant?" and the answer is "per partes".
it's not possible to swallow the elephant in one piece. this was my answer. it's like where to start?
you're for sure smart enough to see my point that your questions might have been discussed here already (this topic is Nr 5541), at least in the vague and generic way as you asked in the first post.

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Binford 6100
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PGP OTC WOT: EB7FCE3D

 April 07, 2011, 11:31:45 PM

We have had some fairly ignorant and argumentative newcomers on here.  divergenta seems intelligent and respectful.  Don't bite the noobs.

ok, no more biting. but reading the archives did not kill anybody either.

lets start again.

there are other costs of currency exchange that are far higher than the few ore difference when calculating the theoretical value of btc in sek (no matter how you calculate it).
as soon as you try to trade, you start paying extra money for money transfers & fees of the exchange market.
p.ex. you have paypal account in SEK but coinpal.ndrix accepts only us\$ plus a convenience fee + paypal fee so you end up with 10% fees of such an exchange.
if you decide to go to an exchange like mtgox, liberty reserve fees + mtgox fee are more or less 5%.
If you do direct mail of cash to someone, you pay the post stamps and are limited by the banknotes denominations (and the fact that there is no known exchange accepting sek in mail).

sorry for my lack of empathy & good behaviour.

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Binford 6100
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 April 07, 2011, 11:37:47 PM

I think your calculations are meaningful.  You can convert your SEK into USD and then into Bitcoins.  There may be some exchange fees in there, but roughly your calculation would hold true.

since i use your service as a reference example i should add that credit card services or paypar would add anything around 1.5-2 % for conversion SEK 2 USD adding that to your convenience fees & the paypal fees.
this is my point, that the exchange transaction costs in the area 8-10 % are much more relevant than searching for cents or promile by looking for the holy grail of currency convertors.

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nanaimogold
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 April 07, 2011, 11:44:59 PM

You might find use for the currency calculator on

http://www.bitcoinroundup.com/

 .┃ eBridging the Physical and Virtual Worlds,eeDigitalizing the IP economy to benefit originaleeIP creators and consumers.e .┃ ..I E O.█████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████.June 2019. .┃ .┃ ████
RodeoX
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The revolution will be monetized!

 April 07, 2011, 11:49:27 PM

I would consider what a BTC is worth to you. Offer that in SDK and see if anyone sells.  Or go see what llama socks sell for in SDK and compare that to BTC.

The gospel according to Satoshi - https://bitcoin.org/bitcoin.pdf
Free bitcoin in ? - Stay tuned for this years Bitcoin hunt!
Binford 6100
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PGP OTC WOT: EB7FCE3D

 April 08, 2011, 01:38:18 AM

nice improvment! seems new to me since i last visited your site
may i ask how you convert us\$ to eur in the summary box?
the big equation starting with 1 oz au = 31,103 g ag = ...

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nanaimogold
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Colletrix-Bridging the Physical and Virtual Worlds

 April 08, 2011, 02:13:05 AM

nice improvment! seems new to me since i last visited your site
may i ask how you convert us\$ to eur in the summary box?
the big equation starting with 1 oz au = 31,103 g ag = ...

All the national currencies are compared by the spot price of gold in those currencies. Because there is so little volume traded gold to bitcoin, I used the relation to USD for the basis of that comparison. It's how I price Pecunix to bitcoin trades.

Beware that, in the real world, the banksters will steal 2-5% of your value when you actually go to make a trade with them. Many banks post up their rates for cash trades. That makes the bitcoin calculator very accurate in comparing rates of exchange, but don't forget the bankster's sticky fingers when you are figuring stuff out.

 .┃ eBridging the Physical and Virtual Worlds,eeDigitalizing the IP economy to benefit originaleeIP creators and consumers.e .┃ ..I E O.█████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████.June 2019. .┃ .┃ ████
Binford 6100
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PGP OTC WOT: EB7FCE3D

 April 08, 2011, 02:52:01 AM

All the national currencies are compared by the spot price of gold in those currencies. Because there is so little volume traded gold to bitcoin, I used the relation to USD for the basis of that comparison.

Thanks for the explanation. Very elegant. Comparing to gold somehow weakens the expectations to avoid premium

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 April 10, 2011, 06:04:00 PM

I would try to find someone who wants to trade USD or EURO for SEK at a decent rate then trade the USD or EURO for BTC either here / irc or an exchange.

Should give you the best rate.

Glad to have you on the boards, you seem like  an intelligent person that asks the right questions (even if they've been asked already) and I'm sure you're not the only one wanting to know so it should help others too.

Welcome.

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