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Author Topic: The introduction of Brokers in Bitcoin, and its possible effects!  (Read 68 times)
CTO114 (OP)
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Today at 02:54:05 PM
 #1

In this context, a broker is a person or an agent that acts as an intermediary between buyers and sellers of Bitcoin. So they are usually hired to carry out trading Bitcoin, so instead of worrying about the volatility of Bitcoin, you're assured that in transactions you'll get your trade worth. They are so prominent in foreign transactions.

It's almost impossible to disassociate the volatility from discussions concerning Bitcoin, so would an introduction of an agent like a third part broker become a possible solution to reducing the risk of volatility, or would such a move compound the stated issues?

If liquidity can be improved, there can be a scenario where Brokers can reduce short-term volatility. If a market situation constitutes more buyers and sellers then trade happens on a larger scale, which can then result in little price swings.
Furthermore, when a Broking contract can be established, a lot of institutions become more secure and comfortable with entering the market which then insinuates a larger capital, with results in a more stable trading environment.

However, the introduction of Brokers may prove to be counter productive. Brokers have a tendency to offer leveraged trading, where traders can control positions much higher that their invested capital. When there are periods of rumours or panic, those in leveraged positions can simply amplify price movements and turning normal corrections into sharp crashes.
Volatility can also be worsened in a situation where large brokers can dominate the trading volume, and during market stress liquidity can disappear quickly.

One understanding point is one of the tenants of Bitcoin, is to reduce intermediaries. If there's a dependable on intermediaries, does it defeat that purpose?
Well, as Bitcoin continues to mature an introduction of Brokers, the risk of an unpredictable volatility may be influenced less by there presence, but more by the incentives they introduce!
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Today at 03:14:46 PM
 #2

There are some brokers that are providing bitcoin buy and sell services where forex traders have access to bitcoin trading.

In crypto, traders deal with crypto exchanges that do the work of the brokers so no need for the brokers.

Regardless of the brokers, bitcoin will be what it is today. What that determines how volatile bitcoin is adoption and nothing else. The more the adoption, the less the volatility.

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Today at 03:31:50 PM
 #3

Quote
If there's a dependable on intermediaries, does it defeat that purpose?
You be the judge of that, Does it? People starting to use brokers doesn't mean it's in Bitcoin.

Quote
as Bitcoin continues to mature an introduction of Brokers, the risk of an unpredictable volatility may be influenced less by there presence, but more by the incentives they introduce!
They are not the answer to Bitcoin volatility.
They can assist short term in making purchases that wouldn't have much impact doesn't mean
They would eliminate volatility in Bitcoin.
Institutions like Strategy makes use of it.


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Khaleedmaine
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Today at 03:38:23 PM
 #4

Can an intermediary really reduce vitality, or does it merely change how volatility is transmitted through the market?
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Today at 03:52:19 PM
 #5

In this context, a broker is a person or an agent that acts as an intermediary between buyers and sellers of Bitcoin. So they are usually hired to carry out trading Bitcoin, so instead of worrying about the volatility of Bitcoin, you're assured that in transactions you'll get your trade worth. They are so prominent in foreign transactions.

It's almost impossible to disassociate the volatility from discussions concerning Bitcoin, so would an introduction of an agent like a third part broker become a possible solution to reducing the risk of volatility, or would such a move compound the stated issues?

Why do you think that having a broker can reduce volatility?
It is wrong to think that having a broker will reduce volatility. Brokers have existed in the Bitcoin market for a long time. They have been acting as exchanges, large direct transaction desks, and various intermediaries for many years. There is no guarantee that the price will be stable just by increasing the number of brokers. Market depth is more important to reduce market fluctuations.
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Today at 08:07:04 PM
 #6

Can an intermediary really reduce vitality, or does it merely change how volatility is transmitted through the market?
In short, there is no much difference with exchange just like I have posted before, brokers accept traders (buyers and sellers) to trader on their platforms, so also they is the the work of crypto exchanges, so no difference. I think this answers your question. I do not see any need for the creation of this topic, but probably OP could have learned from what we posted.

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