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Author Topic: How can the exchanges afford it?  (Read 654 times)
vn10vn
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May 20, 2014, 05:02:03 PM
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Most of the exchanges I see online for Crypto and Bitcoin are run by a couple of guys only.
Let's say a lot of people buy Bitcoin when its at a low price, then it spikes up high and starts to drop again...and now everybody wants to sell it before it drops back to the exchange, how can the exchange afford to pay all these people double or triple the price of what they sold them the coins for?

I don't get it.
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KaChingCoinDev
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May 20, 2014, 05:11:15 PM
 #2

Most of the exchanges I see online for Crypto and Bitcoin are run by a couple of guys only.
Let's say a lot of people buy Bitcoin when its at a low price, then it spikes up high and starts to drop again...and now everybody wants to sell it before it drops back to the exchange, how can the exchange afford to pay all these people double or triple the price of what they sold them the coins for?

I don't get it.

Why? Because the exchange is not the one buying it. It is the buy orders. The exchange is the middleman, getting the fees.
ejinte
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May 20, 2014, 05:21:08 PM
 #3

Most of the exchanges I see online for Crypto and Bitcoin are run by a couple of guys only.
Let's say a lot of people buy Bitcoin when its at a low price, then it spikes up high and starts to drop again...and now everybody wants to sell it before it drops back to the exchange, how can the exchange afford to pay all these people double or triple the price of what they sold them the coins for?

I don't get it.

An exchange never sells or buys coins. They are just connecting sellers and buyers.

 

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newIndia
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May 20, 2014, 06:12:29 PM
 #4

Most of the exchanges I see online for Crypto and Bitcoin are run by a couple of guys only.
Let's say a lot of people buy Bitcoin when its at a low price, then it spikes up high and starts to drop again...and now everybody wants to sell it before it drops back to the exchange, how can the exchange afford to pay all these people double or triple the price of what they sold them the coins for?

I don't get it.

The problem u r talking about applies to coin shops/traders like CoinBase who directly buy/sell coin with their own fund. U'll see they always buy low and sell high and they never hold unless they really predict the market to go up for some certain reason.

vn10vn
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May 20, 2014, 08:00:04 PM
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The problem u r talking about applies to coin shops/traders like CoinBase who directly buy/sell coin with their own fund. U'll see they always buy low and sell high and they never hold unless they really predict the market to go up for some certain reason.

Yes that's what I mean. What if those traders have all these people who just made a huge profit and trying to sell back to them for fiat before the rate drops, and no one is buying coin, but everyone is selling it, then how can the trader afford to pay so many people at such a high rate in that situation?
trader001
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May 21, 2014, 12:51:30 AM
 #6



The problem u r talking about applies to coin shops/traders like CoinBase who directly buy/sell coin with their own fund. U'll see they always buy low and sell high and they never hold unless they really predict the market to go up for some certain reason.

Yes that's what I mean. What if those traders have all these people who just made a huge profit and trying to sell back to them for fiat before the rate drops, and no one is buying coin, but everyone is selling it, then how can the trader afford to pay so many people at such a high rate in that situation?

Most traders are gamblers. And most gamblers lose money.
newIndia
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May 21, 2014, 10:06:12 AM
 #7



The problem u r talking about applies to coin shops/traders like CoinBase who directly buy/sell coin with their own fund. U'll see they always buy low and sell high and they never hold unless they really predict the market to go up for some certain reason.

Yes that's what I mean. What if those traders have all these people who just made a huge profit and trying to sell back to them for fiat before the rate drops, and no one is buying coin, but everyone is selling it, then how can the trader afford to pay so many people at such a high rate in that situation?

The price call comes from the trader. If u look at CoinBase, they are saying at what rate they'll buy/sell. So, they buys or sells coins at their comfortable rate where they can make profit. But, there is always a time lag between buying coins and selling them. If the price drops within that short time, trader will lose. Chances are low, but still there is a chance... and if u know business comes with a risk... life too Wink

Cryptopher
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May 21, 2014, 08:46:30 PM
 #8

Most of the exchanges I see online for Crypto and Bitcoin are run by a couple of guys only.
Let's say a lot of people buy Bitcoin when its at a low price, then it spikes up high and starts to drop again...and now everybody wants to sell it before it drops back to the exchange, how can the exchange afford to pay all these people double or triple the price of what they sold them the coins for?

I don't get it.

In this sense the majority of exchanges are providing the service of matchmaking buyers and sellers. So the exchange isn't outlaying any funds for the purchasing and selling of coins, the risk is with the traders.

Naturally they take their cut per trade (usually), and a slice for getting coins and funds into and out of the exchange, some of which is actually a fee for transmission. I tell you what, exchanges make an absolute killing in times of panic, dat volume.
vn10vn
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May 22, 2014, 04:08:09 PM
 #9

Sounds great in theory, but it seems some of my fears are coming true. Check out xnigma.com and c-cex.com, in the chatboxes, people are having a problem getting their withdrawals.

 Huh   Shocked   Cry
Benjig
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May 22, 2014, 07:21:55 PM
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Sounds great in theory, but it seems some of my fears are coming true. Check out xnigma.com and c-cex.com, in the chatboxes, people are having a problem getting their withdrawals.

 Huh   Shocked   Cry

We are talking about major exchanges and as someone said , the price doesnt get high by the exchange, if the price starts to raise, and lets say only btc-e has the old price, the people will inmmediately get money into btc-e to buy cheap coins and then the price will spike too, and thats where from the exchange will pay to the people who wants to withdraw.

and btc-e, bitstamp, coinbase are not running by two persons, see the buy orders from btc-e, they have 10 millions dollars on it, do you believe they cant afford more people?
CoinMKT.com
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May 22, 2014, 09:16:54 PM
 #11

Most of the exchanges I see online for Crypto and Bitcoin are run by a couple of guys only.
Let's say a lot of people buy Bitcoin when its at a low price, then it spikes up high and starts to drop again...and now everybody wants to sell it before it drops back to the exchange, how can the exchange afford to pay all these people double or triple the price of what they sold them the coins for?

I don't get it.

Why? Because the exchange is not the one buying it. It is the buy orders. The exchange is the middleman, getting the fees.

Exactly.  As exchanges we don't hold and make money per transactions or withdraws.   
Bogleg
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May 23, 2014, 01:41:08 AM
 #12

Mtgox made money by stealing customer's coin.
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