Why do people think exchanges set the prices?

[jonald_fyookball]

There is a lot of belief that exchanges "fix" prices because of how relatively easy it would be for several exchanges to collude and function as a market-maker of sorts. I'm not saying that it happens, but would you really be shocked if it did? I mean, the simple lack of auditability for virtually all bitcoin exchanges says a lot.

That's one of the biggest cons with an "unregulated" market.

Do any exchanges provide true transparency to see real time bids

Most exchanges provide a public API (i.e. one that does not require authentication to access), however the data reported by the API is what the exchange reports, it is not easily verifiable...

Hmmmm.... Here's the thing.... Unless almost all the exchanges colluded in unison, they would be screwing themselves.  Any price fixing in either direction would immediately invite arbitrage at their own expense.

[windpath]

Hmmmm.... Here's the thing.... Unless almost all the exchanges colluded in unison, they would be screwing themselves.  Any price fixing in either direction would immediately invite arbitrage at their own expense.

100% agreed, another reason for the Index

[zolace]

I heard that since bitcoin was the first cryptocoin that it helps determine the prices by the market cap,

[windpath]

I heard that since bitcoin was the first cryptocoin that it helps determine the prices by the market cap,

Market cap = Price X BTC in circulation

or

5.71B = $458.47 * 12,616,825

right now...

Data from: http://www.coincadence.com/bitcoin-index/

[lemfuture]

I heard that since bitcoin was the first cryptocoin that it helps determine the prices by the market cap,

this make sense to me too. bitcoin is the medium

[hellscabane]

Hmmmm.... Here's the thing.... Unless almost all the exchanges colluded in unison, they would be screwing themselves.  Any price fixing in either direction would immediately invite arbitrage at their own expense.

100% agreed, another reason for the Index

I disagree. If several exchanges colluded "strategically" it could happen. [Once again, this is just hypothetical...]

Although some will be able to take advantage with arbitrage, the transaction times of bitcoin end up helping the exchanges. Most people don't have enough funds spread through multiple exchanges. Think of this as a sort of dispersed "pump" or something.

Admittedly, we see this sort of thing with other exchanges dealing in alts (where there are fairly large spreads between exchanges). Although, relative illiquidity is the culprit in those scenarios.

[jonald_fyookball]

Hmmmm.... Here's the thing.... Unless almost all the exchanges colluded in unison, they would be screwing themselves.  Any price fixing in either direction would immediately invite arbitrage at their own expense.

100% agreed, another reason for the Index

I disagree. If several exchanges colluded "strategically" it could happen. [Once again, this is just hypothetical...]

Although some will be able to take advantage with arbitrage, the transaction times of bitcoin end up helping the exchanges. Most people don't have enough funds spread through multiple exchanges. Think of this as a sort of dispersed "pump" or something.

Admittedly, we see this sort of thing with other exchanges dealing in alts (where there are fairly large spreads between exchanges). Although, relative illiquidity is the culprit in those scenarios.

You're partially right in that large spreads would help them get away with it (although that is also self defeating).

But it doesn't matter what "most people" do.  Even 1 competent arbitrager will take money from exchanges trying to set prices, which is enough to discourage it.

[safeminer]

Bitcoin cannot be stopped by stupidity and ignorance, only stalled.
Every retard that get's an audience stalls the adoption, which makes now a better time to buy.
Functionality will overcome tards, just be patient and hold on to all your laughs. So you can throw them in their faces when u ride by
in your BTC payed for lambo aventador

[hellscabane]

Hmmmm.... Here's the thing.... Unless almost all the exchanges colluded in unison, they would be screwing themselves.  Any price fixing in either direction would immediately invite arbitrage at their own expense.

100% agreed, another reason for the Index

I disagree. If several exchanges colluded "strategically" it could happen. [Once again, this is just hypothetical...]

Although some will be able to take advantage with arbitrage, the transaction times of bitcoin end up helping the exchanges. Most people don't have enough funds spread through multiple exchanges. Think of this as a sort of dispersed "pump" or something.

Admittedly, we see this sort of thing with other exchanges dealing in alts (where there are fairly large spreads between exchanges). Although, relative illiquidity is the culprit in those scenarios.

You're partially right in that large spreads would help them get away with it (although that is also self defeating).

But it doesn't matter what "most people" do.  Even 1 competent arbitrager will take money from exchanges trying to set prices, which is enough to discourage it.

You're right in the case that exchanges want to fix a price at set points.

But in the case that exchanges are okay with oscillating funds (still a type of price fixing), unless the person (or people) doing arbitrage has around the same amount of liquid money as the exchanges, the exchanges can still take advantage.