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Author Topic: Decentralization of Bitcoin vs. centralization of exchange market  (Read 755 times)
B!LL de_Cat
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December 28, 2011, 12:35:28 AM
 #1

First of all, thanks for having a section for Newbies, it saves me from having to apologize for all the future face-palms I will be generating...

I think I have a rough idea of BTCs and how they work (though if someone could direct me to a good link that would go more into depth on the concept of "force work" in relation to BTCs and how computer networks go about actually confirming BTCs being released that would be cool) but I had a question about the exchange rate.

I get how the actual bitcoin itself is not "stored" on any central server or bank, and I get how buying and selling of BTCs are used to calculate the exchange rate to any given real-world currency, but my question is since it seems like you would have to have a central marketplace to exchange BTCs, the actual real-world exchange rate DOES rely on a centralized system....in other words, it seems like for BTCs to have any value in relation to real world currency you do have to have a place to go to trade these things for dollars.  Is this right, or can exchanges occur outside of something like Mt. Gox?  If so, how are these exchanges recorded and then organized to produce the rate of exchange?  

EDIT:  Also, is the overall exchange rate simply an average of all the different exchange markets out there?  If so, how is it determined which markets make the cut for being considered in exchange calculation?
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NASDAQEnema
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December 28, 2011, 12:41:33 AM
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No each exchange literally has different values.

Bitcoins are primarily tokens.

We give them value just because we feel like it.

If you feel Universe has trolled you exclusively, please donate to Emergency Butthurt Support Fund:
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B!LL de_Cat
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December 28, 2011, 12:47:26 AM
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No each exchange literally has different values.

Bitcoins are primarily tokens.

We give them value just because we feel like it.

How many exchanges are there out there, and how closely do their respective rates usually agree?
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December 28, 2011, 01:08:00 AM
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Basically, the exchanges follow the price history of mtgox. Mtgox is the fiat authority for major fluctuations. Because price is what "we" want it to be, it is mostly psychological. I have been advocating for a statistical base for price averaging as a psychological factor in price reporting. Because Bitcoin is math based, I feel it's only fitting to have math serve to buffer the price from wild swings rather than depend on mtgox.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
B!LL de_Cat
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December 28, 2011, 01:17:46 AM
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Basically, the exchanges follow the price history of mtgox.

This sounds like the sort of thing the Federal Reserve does for the dollar.  Or not?  Maybe a little?  I was an English major...
NASDAQEnema
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December 28, 2011, 01:50:55 AM
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Nope. Federal Reserve keeps printing thereby obliterating the value.

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notme
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December 28, 2011, 02:03:56 AM
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As for how it works, nothing beats http://www.bitcoin.org/bitcoin.pdf except maybe the source for the reference client (if you can read c++).

https://www.bitcoin.org/bitcoin.pdf
While no idea is perfect, some ideas are useful.
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Shashi Yakuza
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December 28, 2011, 02:09:55 AM
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Same old games, just different players.

The core design of Bitcoin does not address everything that might be needed or wanted, it addresses some issues in a decentralized fashion but it's hardly a complete system. The speed at which traditional centralized solutions were built into the Bitcoin infrastructure has left Bitcoin being neither fish nor fowl. At this point one really needs to step back and ask if any of the claims made for it have been devalued due to this assimilation.

But not to worry, when society collapses and the zombie apocalypse is upon us, the internet will somehow still be working so we can trade our valuable Bitcoins with each other  Grin
cbeast
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December 28, 2011, 02:12:16 AM
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But not to worry, when society collapses and the zombie apocalypse is upon us, the internet will somehow still be working so we can trade our valuable Bitcoins with each other  Grin

Zombies need internet porn too.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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