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I have the (possibly wrong) suspect that Bitcoin questions are not received too well here, so I kindly ask you to go easy on me :-)

According to this question we should categorize Bitcoin as a currency. Deflationary by default (which is the opposite of just any other currency) and incredibly volatile (maybe more so than any other currency: I don't know), but still a currency. Thus, when I go to Yahoo Finance to look at the current Bitcoin value, this is the correct quote:

https://finance.yahoo.com/quote/BTCUSD%3DX?p=BTCUSD%3DX

All the others are funds, stocks (of some companies related to Bitcoin, I guess) or indices, so they're not what I'm looking for.

What I don't understand is, why is it quoted as "BTCUSD"? It's not like you have an "EURUSD" or "USDEUR" quote - each currency at a given time has a specific value in each other currency, but why for Bitcoin do we need to specify it in the currency name? Is it that there are multiple Bitcoin markets? At a given moment in time, does Bitcoin have a well-defined value in dollars, independently of where I buy it? Note I'm only talking about Bitcoin here - not about any other cryptocurrency.

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    Price will vary by exchange, but that doesn't likely have anything to do with how Yahoo displays it. It just looks like how they do prices for all currency exchange rates, do you see examples that don't list the terminating currency? Same for gold: finance.yahoo.com/quote/xauusd=X?ltr=1 – Hart CO Apr 4 '18 at 18:18
  • "it will vary by exchange": do you mean that its value in, say, dollars, will vary in time? In the same way that the euro-dollar exchange rate changes in time? Or do you mean that exactly at the same point in time, Bitcoin can have different exchange rates with the same currency (say, the dollar) depending on whether you're trading Bitcoins on the Wall Street Stock Exchange, or on the Tokyo Stock Exchange? – DeltaIV Apr 4 '18 at 18:19
  • Very interesting. What are CoinDesk and Kraken? At this point, I wonder what's the price I see on Yahoo: is the price on this CoinDesk Stock Exchange? Is it the price on another one? Would you like to write an answer with these details, or refer me to existing answers if this is a duplicate? For what it concerns the USD suffix, you're right, that's just a Yahoo thing: they do the same for the Euro it.finance.yahoo.com/quote/eurusd=x – DeltaIV Apr 4 '18 at 18:33
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    "It's not like you have an "EURUSD" or "USDEUR" quote " This is simply wrong. Type EURUSD or USDEUR into google and you will get millions of hits. " At a given moment in time, does Bitcoin have a well-defined value in dollars, independently of where I buy it? Note I'm only talking about Bitcoin here - not about any other currency." The 'dollar' is a currency - you are talking about USD. – Grade 'Eh' Bacon Apr 4 '18 at 20:15
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    If you look up the price of a stock on Yahoo you are seeing an estimate of the current price based on recent transactions. Likewise, you probably have two grocers near you that charge two different prices for indistinguishable apples. There is truly nothing that has a well-defined value independently of where you buy it, and a well-defined value in USD is only achieved by USD themselves which are also always fluctuating in value. – Paulpro Apr 4 '18 at 20:30
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Are there multiple Bitcoin markets?

Yes. They are almost entirely unregulated, so there is no 'order protection rule' that imposes consistency of prices across markets as US national exchanges do.

According to this question we should categorize Bitcoin as a currency

This is a matter for debate. It is not a government backed currency such as what can be traded in the Foreign Exchange market. It only has value based on what people are willing to pay for it, and what people are willing to accept. One has to be careful to understand that purchasing a Bitcoin is not an "investment" but rather a "speculative investment". A better speculative investment than buying a PowerBall ticket, but a speculative investment nevertheless. If Bitcoin goes out of fashion, it will go to zero. If it remains popular, it should increase in value.

What I don't understand is, why is it quoted as "BTCUSD"?

Ticker symbols vary across market data providers. While stocks typically only have one 'base currency' (e.g. IBM is usually always quoted in US dollars) some things are available in different currencies. As a result, market data providers may provide detail in the ticker to distinguish the different currency versions.

You can buy Bitcoin with different currencies, such as Euro, British Pounds, etc.

Multiple Exchanges

You might not know, but currency is not traded on an exchange but 'over the counter'. Some market data providers simply poll some large banks to see what prices they're willing to buy and sell currencies at, and take the best ones to come up with the rate. That is why it is hard to get details of volume and quantities traded - there is no central place where that data can be collected.

Most Bitcoin 'exchanges' are simply electronic platforms to perform over the counter trading (in a similar way to currencies). They are definitely not 'exchanges' as the Securities and Exchange Commission would define them (and be subject to regulation by them).

Some offer data like what you would receive from an exchange, like market data, trade volume, etc. But as they are minimally regulated. There are not a lot of mechanisms to ensure they're not just making the numbers up randomly. Not that this happens, just that there are not so many mechanisms to prevent it from happening.

At a given moment in time, does Bitcoin have a well-defined value in dollars, independently of where I buy it?

The price on one Bitcoin trading platform ('exchange') is usually close to the price on another. If the difference gets too large, people can 'arbitrage' the differences (buy on one, sell on the other, make a quick, risk free profit). Some tickers may get data one platform, average or take the best of a set. Ultimately the most valuable prices are ones where you are sure you can trade against them at the specified price - which would be the price from a single exchange. Otherwise it is an 'indicator'. As the value of Bitcoin can vary depending on people's moods in the market and there is nothing intrinsically valuable there is not much more to underpin Bitcoin's price, it is difficult to value it in any other way than what people are willing to pay for it.

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    "It only has value based on what people are willing to pay for it, and what people are willing to accept." How is that any different from the mechanism of supply and demand for any other good? Isn't price/value of any good the intersection between what someone is willing to pay, and someone else is willing to accept? – DeltaIV Apr 5 '18 at 14:57
  • "Ultimately the most valuable prices are ones where you are sure you can trade against them at the specified price - which would be the price from a single exchange. Otherwise it is an 'indicator'.". All of your answer is very good, but this excerpt in particular is brilliant - you got my point exactly. Thanks – DeltaIV Apr 5 '18 at 15:00
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    @DeltaIV - I agree with your point that the price/value of any good is the intersection between what someone is willing to pay, and someone else is willing to accept, but some situations it is more automatic, for example: if I'm buying cattle feed for $100/ton and someone some for $80/ton, of course I'm going to buy it. It is not just will, but business need. – xirt Apr 5 '18 at 15:22
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What I don't understand is, why is it quoted as "BTCUSD"? It's not like you have an "EURUSD" or "USDEUR" quote - each currency at a given time has a specific value in each other currency, but why for Bitcoin do we need to specify it in the currency name?

How else would you differentiate what units you're looking at? For any exchange you need units on both sides for clarity. 1 BTC = ? USD, the listing gives you all the relevant information. Likely the convention arose because those trading in currencies are less likely to always have their native currency on one side of a trade.

Is it that there are multiple Bitcoin markets? At a given moment in time, does Bitcoin have a well-defined value in dollars, independently of where I buy it?

Yes, price will vary by exchange, but this is unrelated to why they list the prices as they do. CoinDesk and Kraken (two popular cryptocurrency exchanges) will have different prices for Bitcoin, it's different groups of people buying/selling on each exchange, so there is some variance. It shouldn't be too large a variance ever, since people can take their business to a competing exchange if one loses favor. Bitcoin has a pretty well-defined value in dollars at any point in time, but for some market inefficiency introduced by competing exchanges.

What yahoo, coinmarketcap.com, or any other site show as a price could be a weighted average, average, or they could just pick an exchange to base it on, they probably disclose it somewhere.

  • Thanks! This clarifies both my doubts. I just recently started learning about the stock market (this is my second question here) and I see I have a lot to learn. – DeltaIV Apr 4 '18 at 23:17

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