How will we move away from the infamous exchange prices?

[Nagle]

People value BTC at rates other than what is on the exchanges (e.g. non exchange sales), but the famous exchanges set the price and everywhere else follows. This monopoly on the price needs to be broken.

That's how markets work. As long all the exchanges track each other reasonably closely, and the bid/ask spreads are small, no single exchange controls the price and the market is working. When you see big differences between exchanges, an exchange is probably in trouble. (Mt. Gox was in that condition for months.)

If anybody has a "monopoly on price", it's the Coinbase buy price, which most merchants use.  It's usually very close to the exchange price; they don't seem to use that to make money on the spread.

LocalBitcoins is an inefficient market - the bid/ask spreads are huge. Robocoin ATMs overcharge - 7%  spread to buy, 7% spread to sell, plus a 5% fee. Robocoin used to put their buy and sell prices on the machine's idle screen, but stopped doing that to hide their huge spread.

[cafucafucafu]

The different exchanges 'follow' each other because of arbitrage and the (wonderful) property named 'fungibility' which Bitcoin possesses!

...
E.g. there is a dump on Bitfinex, then the Chinese exchanges follow that dump. I can't see how arbitrage can work at all in that situation. You then need to transfer from Yuan back to Dollars. There simply isn't enough time to do that.
...

My understanding is that fiat & btc is kept in both exchanges by the people doing arbitrage. Buy on one exchange, Sell on the other.
They aren't usually depositing/withdrawing constantly, as you said, there isn't enough time.
Also, i think most of the arbitrage traders are automated bot traders.

This doesn't work. I have done the calculations and could not find a viable way in which this works.

If you can prove that it is arbitrage that is responsible for the exchanges following each-other, then my whole OP is redundant. I contend that when a dump happens on one exchange then the people on the other exchanges follow due to panic/hope.

Arbitrage is responsible from moment to moment, 24/7, mostly with bots, when there is no panic/hope or dump.
When there is a dump, the exchanges follow each other (arbitrage is not the purpose, but to cut losses), because of (1) the people on that exchange selling, (2) peoples call settings they previously set activating, & (3) trading bots cutting losses.
You can't really arbitrage during a dump. If you could, that might be possible insider information and was a pump & dump scheme.

A dump is the best time for arbitrage. I know how to code bots and I can tell you that when there is little volatility it's much harder to find enough time to do arbitrage.

[AgentofCoin]

The different exchanges 'follow' each other because of arbitrage and the (wonderful) property named 'fungibility' which Bitcoin possesses!

...
E.g. there is a dump on Bitfinex, then the Chinese exchanges follow that dump. I can't see how arbitrage can work at all in that situation. You then need to transfer from Yuan back to Dollars. There simply isn't enough time to do that.
...

My understanding is that fiat & btc is kept in both exchanges by the people doing arbitrage. Buy on one exchange, Sell on the other.
They aren't usually depositing/withdrawing constantly, as you said, there isn't enough time.
Also, i think most of the arbitrage traders are automated bot traders.

This doesn't work. I have done the calculations and could not find a viable way in which this works.

If you can prove that it is arbitrage that is responsible for the exchanges following each-other, then my whole OP is redundant. I contend that when a dump happens on one exchange then the people on the other exchanges follow due to panic/hope.

Arbitrage is responsible from moment to moment, 24/7, mostly with bots, when there is no panic/hope or dump.
When there is a dump, the exchanges follow each other (arbitrage is not the purpose, but to cut losses), because of (1) the people on that exchange selling, (2) peoples call settings they previously set activating, & (3) trading bots cutting losses.
You can't really arbitrage during a dump. If you could, that might be possible insider information and was a pump & dump scheme.

A dump is the best time for arbitrage. I know how to code bots and I can tell you that when there is little volatility it's much harder to find enough time to do arbitrage.

Ok well then go do arbitrage during a dump and get rich.

[manselr]

Wait for Gemini, until then do not put money in any exchange.

[manselr]

We dont even need a single exchange, localbitcoin average sell/buy would be the price.

[AgentofCoin]

We dont even need a single exchange, localbitcoin average sell/buy would be the price.

When it comes to Localbitcoins, all the prices are based on a exchange price, plus or minus the sellers/buyers % rate.
You actually pay over what you should on localbitcoins, on average.

[cafucafucafu]

We dont even need a single exchange, localbitcoin average sell/buy would be the price.

When it comes to Localbitcoins, all the prices are based on a exchange price, plus or minus the sellers/buyers % rate.

And this is the big problem.

[j5d]

Lose the exchanges completely. Bitcoin was supposed to be a Person to Person EXCHANGE of value. Then people started EXCHANGING local currency for Bitcoin. Then greed got in the way and someone wanted to make money, so they created EXCHANGE houses.

Every single Altcoin that has been developed, whether it is superior in technology or ease of use or adoption or speed of confirmations etc, is now brought into exchange houses against Bitcoin and every other altcoin.

Person to person has been completely overpowered by exchanges. You want to move away from exchange prices? Trade an altcoin that exchanges won't touch. It's just so unfortunate that the measure of a successful cryptocurrency is how many exchanges it exists in.

[hashman]

Lose the exchanges completely. Bitcoin was supposed to be a Person to Person EXCHANGE of value. Then people started EXCHANGING local currency for Bitcoin. Then greed got in the way and someone wanted to make money, so they created EXCHANGE houses.

Every single Altcoin that has been developed, whether it is superior in technology or ease of use or adoption or speed of confirmations etc, is now brought into exchange houses against Bitcoin and every other altcoin.

Person to person has been completely overpowered by exchanges. You want to move away from exchange prices? Trade an altcoin that exchanges won't touch. It's just so unfortunate that the measure of a successful cryptocurrency is how many exchanges it exists in.

You seem to be missing something.  If I trade bitcoin for rice that is an  exchange.  If I trade dollars for rice that is an exchange.  If I trade bitcoin for dollars that is an exchange.  In all cases a price must be arrived at.  We have a problem of price discovery in all of these exchanges.  You can't avoid the need to make exchanges. 

[cafucafucafu]

I need to reiterate my point.

The transaction volume is going up but the volume on the exchanges is not. This highlights my point. Greater adoption/activity does not necessitate greater volume on the exchanges. The volume on the exchanges will always be a major weak point for the volatility.

[RodeoX]

The price will always be what people are paying on the exchanges and not some number we want it to be. There is only supply and demand in BTC. If you want bitcoins to be $500 each then you are going to have to convince every bitcoin owner on the planet to not sell for less. The exchange price is "The Price".

[cafucafucafu]

The price will always be what people are paying on the exchanges and not some number we want it to be. There is only supply and demand in BTC. If you want bitcoins to be $500 each then you are going to have to convince every bitcoin owner on the planet to not sell for less. The exchange price is "The Price".

No, the supply and demand is not just on exchanges. Yes exchanges do determine the prices but we need to find other solutions.

[RodeoX]

The price will always be what people are paying on the exchanges and not some number we want it to be. There is only supply and demand in BTC. If you want bitcoins to be $500 each then you are going to have to convince every bitcoin owner on the planet to not sell for less. The exchange price is "The Price".

No, the supply and demand is not just on exchanges. Yes exchanges do determine the prices but we need to find other solutions.

I'm not sure what other options they are? Whatever price I pick will be meaningless. I could say gold is $200 and Oz., But no exchange would sell for that price so it's all in my head. I find that Google does a good job with their weighted price from many exchanges. Weighted advantages are a bit less volatile. Maybe that is more inline with what your thinking?

[cafucafucafu]

The price will always be what people are paying on the exchanges and not some number we want it to be. There is only supply and demand in BTC. If you want bitcoins to be $500 each then you are going to have to convince every bitcoin owner on the planet to not sell for less. The exchange price is "The Price".

No, the supply and demand is not just on exchanges. Yes exchanges do determine the prices but we need to find other solutions.

I'm not sure what other options they are? Whatever price I pick will be meaningless. I could say gold is $200 and Oz., But no exchange would sell for that price so it's all in my head. I find that Google does a good job with their weighted price from many exchanges. Weighted advantages are a bit less volatile. Maybe that is more inline with what your thinking?

I don't know what solutions there are. This is why I am asking.

[pitham1]

The price will always be what people are paying on the exchanges and not some number we want it to be. There is only supply and demand in BTC. If you want bitcoins to be $500 each then you are going to have to convince every bitcoin owner on the planet to not sell for less. The exchange price is "The Price".

No, the supply and demand is not just on exchanges. Yes exchanges do determine the prices but we need to find other solutions.

Exchanges will continue to be the benchmark, because this supply/demand is visible and ascertainable.

[mlferro]

We dont even need a single exchange, localbitcoin average sell/buy would be the price.

When it comes to Localbitcoins, all the prices are based on a exchange price, plus or minus the sellers/buyers % rate.

And this is the big problem.

Yes, I also see this as the main problem.

but, most importantly, is how to solve this?

[j5d]

You seem to be missing something.  If I trade bitcoin for rice that is an  exchange.  If I trade dollars for rice that is an exchange.  If I trade bitcoin for dollars that is an exchange.  In all cases a price must be arrived at.  We have a problem of price discovery in all of these exchanges.  You can't avoid the need to make exchanges. 

I see I wasn't clear in my comment. Let me explain myself.

Lose the exchanges completely should have read Lose the exchange houses completely. My repetition of the word "exchange" in bold was meant to show that exchanges were happening, and then someone seized on the idea of satisfying a perceived need of a place to organize these exchanges. Hence the creation of an exchange house not only centralized a currency that was supposed to remain un-centralized, but it tried to fit something new and different into the mold of what currently exists.

Cryptocurrency has now been deformed. Altcoins now have to be traded in an exchange house to be seen as legitimate, even if they are an improvement in any way over bitcoin.

[hashman]

You seem to be missing something.  If I trade bitcoin for rice that is an  exchange.  If I trade dollars for rice that is an exchange.  If I trade bitcoin for dollars that is an exchange.  In all cases a price must be arrived at.  We have a problem of price discovery in all of these exchanges.  You can't avoid the need to make exchanges. 

I see I wasn't clear in my comment. Let me explain myself.

Lose the exchanges completely should have read Lose the exchange houses completely. My repetition of the word "exchange" in bold was meant to show that exchanges were happening, and then someone seized on the idea of satisfying a perceived need of a place to organize these exchanges. Hence the creation of an exchange house not only centralized a currency that was supposed to remain un-centralized, but it tried to fit something new and different into the mold of what currently exists.

Cryptocurrency has now been deformed. Altcoins now have to be traded in an exchange house to be seen as legitimate, even if they are an improvement in any way over bitcoin.

I think you're on the right track.  However things will probably happen more like a slow evolution of existing exchange houses toward more transparency, and more reliance on other kinds of exchange services with partial decentralization.  Should be interesting to watch.  At least we are making progress, I don't think anybody would have said that ten years ago. 

[jonald_fyookball]

OP, you are inventing a problem in your brain that actually doesn't exist.

[lucasjkr]

What are you talking about?

Exchanges "should" only be quoting the bids and asks posted buyers and sellers. So, of course, if the price moves down on one exchange, it'll go down on all of them - otherwise, everyone would leave the more expense exchanges in droves when the price got too far out of whack.

How exactly do you propose that the community, the markets, and the world value Bitcoin if not for exchange pricing, which tracks the prices that willing buyers and sellers are willing to transact for? Dollars, euros, oil, all of those are quoted on exchanges as well. Why should bitcoin be different/exempt?