Coinbase is not conventional real time exchange where price is determined by demand-supply. They fetch rate from Bitstamp and execute trades. That's it!
That said, how do they cope with current situation like this, where flash crash occurs? I guess, their buying and selling is backed by liquidity plus some buffer stocks of coins. Do they forward order to order books of international exchanges?
Don't you think, exchanges like Coinbase would distort market in near future if they become too big? Because real time exchanges are suppose to determined rate by processing information by individual buyer/seller with their price quote. What is mean is, price is determined by information, that is one of basic principles of free market and when exchanges like Coinbase are too big they can absorb very important 'buying/selling order that ought to be reflecting information/market sentiment.
I would imagine their own systems go into a 'self preserve' state whenever their coins to be sold for the day goes too high, plus they do also buy coins at the listed rate too - they wouldn't have their USD reserves on bitstamp exceed what they would willingly buy in case btc flash crashes too far and fails to recover.
Nice! What about second question- Aren't they affecting free market with their new age so called 'exchanges' by absorbing 'buying/selling' orders which must go to orderbooks to determine correct market price? I think its more of remittance platform rather than exchange. I hate when they call themselves exchange.
On other hand, I've heard some news that merchant processing companies are not liquidating Bitcoin on exchanges rather they've become buying agent for some investors. Is that true? Bitcoin is suppose to be blood in the veins of future free market. Is its price threatened by these kind of manipulating activity?
Forgive me for my thinking pattern. I request your patience on question.
