Third party retailer for exchanges

[jonathan2]

When "exchanges" or places where you can buy bitcoins for fiat currency actually make that trade - where are the bitcoins coming from? From what I understand many exchanges use a third party retailer to supply the bitcoins to the end-customer, meaning that companies such as Coinbase, Safello, bitstamp and so on buy their bitcoins from another company which then is traded for fiat.

Is that normally how the setup is like?

Who are these third party bitcoin retailers? Does anybody know?

[MrWDunne]

When "exchanges" or places where you can buy bitcoins for fiat currency actually make that trade - where are the bitcoins coming from? From what I understand many exchanges use a third party retailer to supply the bitcoins to the end-customer, meaning that companies such as Coinbase, Safello, bitstamp and so on buy their bitcoins from another company which then is traded for fiat.

Is that normally how the setup is like?

Who are these third party bitcoin retailers? Does anybody know?

Two parter:

The exchanges like Bitstamp have users which want to sell, and users that want to buy. The ones who want to buy, buy from those who want to sell.

Coinbase buy theirs on various exchanges, like Bitstamp to sell on their platform.

[newIndia]

When "exchanges" or places where you can buy bitcoins for fiat currency actually make that trade - where are the bitcoins coming from? From what I understand many exchanges use a third party retailer to supply the bitcoins to the end-customer, meaning that companies such as Coinbase, Safello, bitstamp and so on buy their bitcoins from another company which then is traded for fiat.

Is that normally how the setup is like?

Who are these third party bitcoin retailers? Does anybody know?

CoinBase should not be classified as a Bitcoin exchange. It is more of a Bitcoin shop who buys/sells their coins at exchanges too. Bitstamp, BTC-e or LocalBitcoins are exchanges where people like U & me can buy/sell coins. The first 2 are real time exchange where deposit/withdraw take a lot of time. The third one is a P2P exchange where buying & selling is almost instantaneous.

[ranlo]

When "exchanges" or places where you can buy bitcoins for fiat currency actually make that trade - where are the bitcoins coming from? From what I understand many exchanges use a third party retailer to supply the bitcoins to the end-customer, meaning that companies such as Coinbase, Safello, bitstamp and so on buy their bitcoins from another company which then is traded for fiat.

Is that normally how the setup is like?

Who are these third party bitcoin retailers? Does anybody know?

CoinBase should not be classified as a Bitcoin exchange. It is more of a Bitcoin shop who buys/sells their coins at exchanges too. Bitstamp, BTC-e or LocalBitcoins are exchanges where people like U & me can buy/sell coins. The first 2 are real time exchange where deposit/withdraw take a lot of time. The third one is a P2P exchange where buying & selling is almost instantaneous.

This. Everyone claims Coinbase is an exchange, but they aren't. They simply use third parties for their coin purchases and sales. As far as I'm aware, they do it through Bitstamp (who I think is also who Bitpay goes through?).

[MrWDunne]

When "exchanges" or places where you can buy bitcoins for fiat currency actually make that trade - where are the bitcoins coming from? From what I understand many exchanges use a third party retailer to supply the bitcoins to the end-customer, meaning that companies such as Coinbase, Safello, bitstamp and so on buy their bitcoins from another company which then is traded for fiat.

Is that normally how the setup is like?

Who are these third party bitcoin retailers? Does anybody know?

CoinBase should not be classified as a Bitcoin exchange. It is more of a Bitcoin shop who buys/sells their coins at exchanges too. Bitstamp, BTC-e or LocalBitcoins are exchanges where people like U & me can buy/sell coins. The first 2 are real time exchange where deposit/withdraw take a lot of time. The third one is a P2P exchange where buying & selling is almost instantaneous.

This. Everyone claims Coinbase is an exchange, but they aren't. They simply use third parties for their coin purchases and sales. As far as I'm aware, they do it through Bitstamp (who I think is also who Bitpay goes through?).

Incorrect on both counts. Sort of.

Bitpay uses an enterprise exchange which provides huge amounts of liquidity and spreads over several markets (I have forgotten the name, sorry). And I think coinbase does too, although I think they both also use a few other exchanges (possibly including bitstamp)

[ranlo]

When "exchanges" or places where you can buy bitcoins for fiat currency actually make that trade - where are the bitcoins coming from? From what I understand many exchanges use a third party retailer to supply the bitcoins to the end-customer, meaning that companies such as Coinbase, Safello, bitstamp and so on buy their bitcoins from another company which then is traded for fiat.

Is that normally how the setup is like?

Who are these third party bitcoin retailers? Does anybody know?

CoinBase should not be classified as a Bitcoin exchange. It is more of a Bitcoin shop who buys/sells their coins at exchanges too. Bitstamp, BTC-e or LocalBitcoins are exchanges where people like U & me can buy/sell coins. The first 2 are real time exchange where deposit/withdraw take a lot of time. The third one is a P2P exchange where buying & selling is almost instantaneous.

This. Everyone claims Coinbase is an exchange, but they aren't. They simply use third parties for their coin purchases and sales. As far as I'm aware, they do it through Bitstamp (who I think is also who Bitpay goes through?).

Incorrect on both counts. Sort of.

Bitpay uses an enterprise exchange which provides huge amounts of liquidity and spreads over several markets (I have forgotten the name, sorry). And I think coinbase does too, although I think they both also use a few other exchanges (possibly including bitstamp)

Are you sure about the Bitstamp/Coinbase one being off, though? I remember for a long time their numbers matched up (even though the various exchanges had volatility). I think that's where the theory that they work just off Bitstamp came from. And also for a long time, Bitpay and Coinbase had the same values (despite volatility in exchanges).

It's possible that things changed since then though, possibly in part to help fight that volatility.

[jonathan2]

When "exchanges" or places where you can buy bitcoins for fiat currency actually make that trade - where are the bitcoins coming from? From what I understand many exchanges use a third party retailer to supply the bitcoins to the end-customer, meaning that companies such as Coinbase, Safello, bitstamp and so on buy their bitcoins from another company which then is traded for fiat.

Is that normally how the setup is like?

Who are these third party bitcoin retailers? Does anybody know?

CoinBase should not be classified as a Bitcoin exchange. It is more of a Bitcoin shop who buys/sells their coins at exchanges too. Bitstamp, BTC-e or LocalBitcoins are exchanges where people like U & me can buy/sell coins. The first 2 are real time exchange where deposit/withdraw take a lot of time. The third one is a P2P exchange where buying & selling is almost instantaneous.

This. Everyone claims Coinbase is an exchange, but they aren't. They simply use third parties for their coin purchases and sales. As far as I'm aware, they do it through Bitstamp (who I think is also who Bitpay goes through?).

Incorrect on both counts. Sort of.

Bitpay uses an enterprise exchange which provides huge amounts of liquidity and spreads over several markets (I have forgotten the name, sorry). And I think coinbase does too, although I think they both also use a few other exchanges (possibly including bitstamp)

Yes, I think what Bitpay is doing appears to be something of an industry practice. I emailed a European exchange and the replied back that they have a liquidity pool with many different exchanges and people they are buying and selling bitcoins from. Which kind of makes sense, I guess by doing that you can get better prices.

How do these liquidity pools work? How would one go about finding one if one is interested of buying and selling bitcoins on a bigger scale?

[_smudger_]

Why did MtGox hold so many Bitcoins if it was just an exchange?

Was it also a wallet provider?

[ranlo]

Why did MtGox hold so many Bitcoins if it was just an exchange?

Was it also a wallet provider?

It was the most popular exchange, so people left their Bitcoin and cash there for quick trading back and forth (Bitcoin day trading). A lot of people didn't use it just for buying and selling and then withdrawing.