Replace BTC for EUR, CHF, GBP or any other currency (or even a physical good, like an ounce of gold) and see what changes. The fact that BTC is a cryptocurrency doesn't change anything in how trades happen. And the fact that 1BTC used to be 10USD but now is 10k USD is no different than 1USD being 0.95EUR one year ago and 0.85EUR today. The difference is larger, yes, but that doesn't matter.
Ask HN: How can Coinbase make good on deposits/withdrawals?
11–20 of 42 posts
Re: Ask HN: How can Coinbase make good on deposits/withdrawals?
#12[deleted]
Re: Ask HN: How can Coinbase make good on deposits/withdrawals?
#13Coinbase's exchange GDAX matches sellers with buyers. The buyers bring the cash to the party, not Coinbase.
Re: Ask HN: How can Coinbase make good on deposits/withdrawals?
#14When you buy or sell on an exchange, you're not transacting against the exchange, but against a counterparty, via the exchange; someone like you, but making the opposite transaction. If you sell a Bitcoin for $10k, then someone else brought $10k to the exchange and offered to exchange it for a Bitcoin.
The only way an exchange wouldn't be able to honour deposits is if they lost them, or because of fraud. A surge in price shouldn't affect the solvency of the exchange.
Re: Ask HN: How can Coinbase make good on deposits/withdrawals?
#15Coinbase can use (and runs) an exchange to get liquidity. When a user sells their coins, Coinbase goes to an exchange and sells them on, taking a cut.
The way things are moving it seems no one is selling and that's what baffles me. Crypto market is something we have never seen before where people are buying and not selling that is what is driving the price of Bitcoin.
People are selling, otherwise there would be no market.
Re: Ask HN: How can Coinbase make good on deposits/withdrawals?
#16Coinbase can use (and runs) an exchange to get liquidity. When a user sells their coins, Coinbase goes to an exchange and sells them on, taking a cut.
The way things are moving it seems no one is selling and that's what baffles me. Crypto market is something we have never seen before where people are buying and not selling that is what is driving the price of Bitcoin.
Not true. For each buy that happens, there must be a sale. There are more buyers than sellers right now, not no sellers. Each time the price goes up, that's a sale _that happened_
This is something we've seen many times before. It's not new. It's a classic bubble where demand (buyers) greatly outstrips supply (sellers).
The big question is why. Crypto currencies haven't suddenly gotten more useful. The current rise is fueled by speculation of the ability to resell at a higher price.
Re: Ask HN: How can Coinbase make good on deposits/withdrawals?
#17I think people forget - Coinbase makes profit in BTC too.
The issue of disbursement might have happened if they were completely USD or fiat business and the market ran away from them during conversion. But btc fees has them covered.
Re: Ask HN: How can Coinbase make good on deposits/withdrawals?
#18To get your fiat cash out, you'd have to sell that 1 BTC for $10,000. Someone needs to be on the other side of that trade buying it. You get their $10K, and they get your 1 BTC (and coinbase takes a small percentage for facilitating the transaction). If nobody wants to buy your BTC at $10K, you don't get "your" money out, until coinbase can find a buyer to match with your sale. In your example, all 10 of you start lo…
I think this is also a basic concept of the stock market that many people don't understand as well.
Re: Ask HN: How can Coinbase make good on deposits/withdrawals?
#19To get your fiat cash out, you'd have to sell that 1 BTC for $10,000. Someone needs to be on the other side of that trade buying it. You get their $10K, and they get your 1 BTC (and coinbase takes a small percentage for facilitating the transaction). If nobody wants to buy your BTC at $10K, you don't get "your" money out, until coinbase can find a buyer to match with your sale. In your example, all 10 of you start lo…
If you hit the Depth Chart button on this graph [1] you can see a visual representation of all the offers to buy and sell. Where they meet in the middle is where people have successful transactions and that is the current "price" of bitcoin.
Re: Ask HN: How can Coinbase make good on deposits/withdrawals?
#20To get your fiat cash out, you'd have to sell that 1 BTC for $10,000. Someone needs to be on the other side of that trade buying it. You get their $10K, and they get your 1 BTC (and coinbase takes a small percentage for facilitating the transaction). If nobody wants to buy your BTC at $10K, you don't get "your" money out, until coinbase can find a buyer to match with your sale. In your example, all 10 of you start lo…
naive question: does coinbase really make markets in BTC??