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Can someone tell me how is current price of bitcoin or any other crypto currency calculated, or point me in direction where I can learn more about market mechan

by smnplk 9y ago

Can someone tell me how is current price of bitcoin or any other crypto currency calculated, or point me in direction where I can learn more about market mechanics. Say I want to develop a toy stock market, what do I need to know ? Any good book resources ? I found this while writing my comment http://www.dummies.com/education/economics/how-to-determine-price-find-economic-equilibrium-between-supply-and-demand/ http://www.dummies.com/education/economics/how-to-determine-...

erikb 9y ago
You have a database where people can say "I want to buy x amount item of type y for at most price z" and "I want to sell x' amount item of type y' for at least price z'". And if the database finds a match then a contract is made (doesn't necessarily mean that immediately money or product will change locations, just legal ownership changes). For instance I say I want to buy 100 bananas for at most $500. You say you want to sell 50 bananas for at least $450. Then both our demands match and I buy 50 bananas from you for $450. Since often there are different kind of offers from both sides not all can match and you have two lists of open buy and sell offers. A practical detail is that if you either want to buy or sell right now you will of course create a counter offer to the corresponding top of the list of the other type and a trade happens immediately. I'm no expert but I think this is the most common kind of trade. It's a little like in a shop. You just take whatever the price tag says. Smart people will also try to make offers close to the top of their list even if they don't want to buy immediately. But if they are too far away the trade may never happen and they pay the offer fee for nothing. I think most of these trade platforms make money by fees. You make an offer, you pay a fee (probably a percentage of your offering price). And there's also a second kind of fee for trades that actually happened. There are other kind of trades that basically simulate bets. And most of these terms have different names. Both of these things mostly are created to make it look more complicated and make you feel stupid. The current price of bitcoin for instance is just the amount of $ per BTC that the last trade contained. In theory it's totally possible that the prices of two trades are totally far away, one selling BTC for $1, the other selling for $2million. But in reality due to market dynamics they often are close together and go up or down in steps.
- smnplk 9y ago
  >> There are other kind of trades that basically simulate bets. And most of these terms have different names. Both of these things mostly are created to make it look more complicated and make you feel stupid. I had a feeling about that too :)

by smnplk 9y ago

erikb 9y ago

You have a database where people can say "I want to buy x amount item of type y for at most price z" and "I want to sell x' amount item of type y' for at least price z'". And if the database finds a match then a contract is made (doesn't necessarily mean that immediately money or product will change locations, just legal ownership changes). For instance I say I want to buy 100 bananas for at most $500. You say you want to sell 50 bananas for at least $450. Then both our demands match and I buy 50 bananas from you for $450. Since often there are different kind of offers from both sides not all can match and you have two lists of open buy and sell offers. A practical detail is that if you either want to buy or sell right now you will of course create a counter offer to the corresponding top of the list of the other type and a trade happens immediately. I'm no expert but I think this is the most common kind of trade. It's a little like in a shop. You just take whatever the price tag says. Smart people will also try to make offers close to the top of their list even if they don't want to buy immediately. But if they are too far away the trade may never happen and they pay the offer fee for nothing. I think most of these trade platforms make money by fees. You make an offer, you pay a fee (probably a percentage of your offering price). And there's also a second kind of fee for trades that actually happened. There are other kind of trades that basically simulate bets. And most of these terms have different names. Both of these things mostly are created to make it look more complicated and make you feel stupid. The current price of bitcoin for instance is just the amount of $ per BTC that the last trade contained. In theory it's totally possible that the prices of two trades are totally far away, one selling BTC for $1, the other selling for $2million. But in reality due to market dynamics they often are close together and go up or down in steps.

smnplk 9y ago
>> There are other kind of trades that basically simulate bets. And most of these terms have different names. Both of these things mostly are created to make it look more complicated and make you feel stupid. I had a feeling about that too :)