natedagg
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There are exchanges. There must be a spread. It's too hard to type w iPad.
The last price isn't the price, it's just the last price that a conversion to a currency went for.
If the last price was the price, I would sell 1 Bitcoin for 1 dollar and then buy 1m Bitcoin for a million dollars.
The highest price that a buyer is willing to pay is commonly called the bid, and usually accompanied by a quantity. The lowest price that a seller is willing to offer is called the ask, also w a quantity. The buyer is not adjusting his price usually, but he might get leapfrogged by someone willing to spend more (same w seller).
So the spread is the gap between the 2 prices. Liquidity, in market terms means lots of participants and lots of quantity of the security traded, as I think the formal definition centers around being able to trade without changing the market. A market where the bid-ask is tight but no quantity has "no depth" or is "shallow", because a huge imbalance of buys can trigger a massive price move.
The reason a trader needs small spreads is because those jumps in and out become expensive when the spread is wide. So if a trade costs $30, and you are trading size, then that's nothing. If Bitcoin has a bid-ask that's $5 apart, then there's a big problem.
So usually you can't really say that Bitcoin has a $x spread, it's more "which exchange has liquidity?" Meaning lots of market trades, participants, etc.
Hope that made some sort of sense.
The last price isn't the price, it's just the last price that a conversion to a currency went for.
If the last price was the price, I would sell 1 Bitcoin for 1 dollar and then buy 1m Bitcoin for a million dollars.
The highest price that a buyer is willing to pay is commonly called the bid, and usually accompanied by a quantity. The lowest price that a seller is willing to offer is called the ask, also w a quantity. The buyer is not adjusting his price usually, but he might get leapfrogged by someone willing to spend more (same w seller).
So the spread is the gap between the 2 prices. Liquidity, in market terms means lots of participants and lots of quantity of the security traded, as I think the formal definition centers around being able to trade without changing the market. A market where the bid-ask is tight but no quantity has "no depth" or is "shallow", because a huge imbalance of buys can trigger a massive price move.
The reason a trader needs small spreads is because those jumps in and out become expensive when the spread is wide. So if a trade costs $30, and you are trading size, then that's nothing. If Bitcoin has a bid-ask that's $5 apart, then there's a big problem.
So usually you can't really say that Bitcoin has a $x spread, it's more "which exchange has liquidity?" Meaning lots of market trades, participants, etc.
Hope that made some sort of sense.
