How does Coinbase determine its price?

[BTCIndia]

There are exchanges working on p2p model like Btc-e, Bitstamp etc... which determine price as per demand-supply of market which is calculated every minute or so depending upon exchange. These are just first generation of exchange which do not have scope for market-makers/brokers to inject liquidity. Once Bitcoin is regulated, I'm sure they will have brokerage account just like other stock exchanges. But, coinbase is something different..its is exchange in somewhat different way..where they give their own price for buy and sell; backed by own liquidity and whose profitability depends on volatile spread. Risky business it is.. but hedging strategies and trading algorithms have so much evolved that, they almost manage it without worrying about volatility. I wonder, how they determine price? Is it that they fetch rate from some exchange in native country.. add and deduct some cents and publish it? How exactly do they determine at what price do they have to buy and sell? Which exchange price they take as standard?

[KimNam]

i read this before, i think they pegged to bitstamp
maybe you can read it here :
https://bitcointalk.org/index.php?topic=392422.0
in that thread you can see interesting graphic like this one

[BitCoinDream]

There are exchanges working on p2p model like Btc-e, Bitstamp etc... which determine price as per demand-supply of market which is calculated every minute or so depending upon exchange. These are just first generation of exchange which do not have scope for market-makers/brokers to inject liquidity. Once Bitcoin is regulated, I'm sure they will have brokerage account just like other stock exchanges. But, coinbase is something different..its is exchange in somewhat different way..where they give their own price for buy and sell; backed by own liquidity and whose profitability depends on volatile spread. Risky business it is.. but hedging strategies and trading algorithms have so much evolved that, they almost manage it without worrying about volatility. I wonder, how they determine price? Is it that they fetch rate from some exchange in native country.. add and deduct some cents and publish it? How exactly do they determine at what price do they have to buy and sell? Which exchange price they take as standard?

Are BTC-e, Bitstamp working on P2P. I used to know LocalBitcoins is the one working on P2P !!!

[KimNam]

BTC-e and bitstamp are not P2P exchange, they have centralized servers
bitfinex is P2P exchanger

[TimS]

Ok, so the term isn't P2P. I'm not sure what the term is, but he obviously means it's a place where the users set their buy/sell prices directly, their order is put into a public trade ledger, and the exchange matches up orders that can agree on a price. Coinbase is different: they tell you the price, and you have no choice in that. It's a fair question, and the answer does appear to be "it's tied to Bitstamp". I'd expect that they trade internally when possible, and trade the excess on Bitstamp.

[galbros]

Really nice chart Kim!

I don't think it is perfect P2P but I do think Coinbase exploits its position as a market maker as much as it can.  It seems like the spread between their buy and sell prices does vary based on which way the BTC price is moving.  A chart like Kim's would show that but it needs to be more than just 24 hours to really capture the effect I would expect to see.

I hate to say it, but based on the number of complaints about Coinbase I do worry that they cancel orders when the price action is moving against them and they have not matched your order with another order.

[bounst]

Coinbase does not provide the appropriate api. And now I prefer to see coindesk price, it include bitstamp, btc-e, bitfinex, lakebtc.

[Jamacn]

There are exchanges working on p2p model like Btc-e, Bitstamp etc... which determine price as per demand-supply of market which is calculated every minute or so depending upon exchange. These are just first generation of exchange which do not have scope for market-makers/brokers to inject liquidity. Once Bitcoin is regulated, I'm sure they will have brokerage account just like other stock exchanges. But, coinbase is something different..its is exchange in somewhat different way..where they give their own price for buy and sell; backed by own liquidity and whose profitability depends on volatile spread. Risky business it is.. but hedging strategies and trading algorithms have so much evolved that, they almost manage it without worrying about volatility. I wonder, how they determine price? Is it that they fetch rate from some exchange in native country.. add and deduct some cents and publish it? How exactly do they determine at what price do they have to buy and sell? Which exchange price they take as standard?

Are BTC-e, Bitstamp working on P2P. I used to know LocalBitcoins is the one working on P2P !!!

They are not. It is through exchange-traded.

[fdiini]

A slight mark up from bitstamp.