Silk Road forums
Discussion => Silk Road discussion => Topic started by: jonnybag007 on December 04, 2012, 06:32 pm
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Hi All,
Just a thought for you all. I have noticed that vendors do not react price wise on their goods when the value of bitcoin goes up. However, they clearly do when the bitcoin is devalued. As a buyer this is a little frustrating! For example you could buy bitcoins at £6.5 in the middle of October this year but its bow closer to £8. I have monitored prices closely and have noticed no decrease in prices to the gram etc on here. What i have noticed is vendors being a little fly and offering discounts for example at Halloween, Black Friday and Thanksgiving. Proposing that they are offering the buyer a deal when infact we are paying more and more for their goods.
Any vendor or buyers thoughts on this matter.
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It all depends whether the vendor chooses to hedge the price or not. If they hedge the price then the prices set for the good change with the exchange rate.
HOWEVER, I think if hedged it is tied to the dollar rate, not the GBP rate.
At the moment I think the GBP rate is quite a lot more volatile than the $ rate due to the fact that Mt Gox and Intersango are not accepting GBP bank deposits, I for one have struggled alot more with getting bitcoins.
Prices on SR are high, especially from domestic UK sellers, but considering how poor the UK street market in terms of getting sprayed weed and poor weight what do you expect. What you get off SR is a higher quality imo than on the street (refering to cannabis).
If you look abroad though you can get some good finds, Mrouid M39 is £125 an ounce including shipping if you buy a QP, Swazi's stuff is £80 an ounce if you don't mind lower grade weed.
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PiggyPie doesn't quite have it right but is on the right track. Vendors have the option of tying their price to the dollar or the bitcoin. Almost every listing is tied to the dollar, SR even recommends that vendors keep their prices tied to the dollar to save them from potential risk if the BTC price drops rapidly. Prices in dollars may fluctuate a very very tiny amount when the price of BTC changes (maybe a few pennies in a thousand dollars), especially on more expensive listings, but this is just due to rounding. Prices in dollars on nearly every listing should remain constant no matter what the price of BTC is, unless the vendor manually adjusts their prices, which usually occurs completely separately from BTC price fluctuations. If you choose to view prices in BTC, then the prices of almost every listing will fluctuate as the value of BTC fluctuates.
Hedging is something else entirely. If a vendor chooses to hedge the price, this means that the buyer pays a small extra fee to ensure they get their full purchase price (minus SR fees) in dollars back in the event of a refund or cancellation and SR covers the difference. If the price of BTC goes up between the time the order is placed and the time money is refunded, SR makes money. If the price of BTC goes down, SR loses some money. If a listing is not hedged at all, you simply get back the exact number of BTC you originally paid, minus SR fees.
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I was going to ask about this very thing in another thread.
Clearly, at some point, vendors must react to fluctuations in bitcoin value. If they doubled in value tomorrow, leaving prices alone would effectively mean doubling prices, and I presume sales would dry up completely. But how long does it normally take for vendors to react, and how sensitive to fluctuations are they? Obviously we're talking about individuals here, not a cartel, so I'm just asking in terms of usual practice.
I have noticed that vendors do not react price wise on their goods when the value of bitcoin goes up. However, they clearly do when the bitcoin is devalued.
This reminds me of Canada/US pricing - which I doubt many Americans notice but Canadians certainly do. So, for example, paperbacks will have two printed prices, in USD and CAD, and Canadians pay the CAD. But what happens when the exchange rate wildly fluctuates? Well that seems to depend. When the CAD takes a hit, booksellers are very quick to react, plastering the books with stickers having an even higher price to make up the loss in exchange. When the CAD climbs, standard practice seems to be to whistle and stare at their shoes.
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I was going to ask about this various thing in another thread.
Clearly, at some point, vendors must react to fluctuations in bitcoin value. If they doubled in value tomorrow, leaving prices alone would effectively mean doubling prices, and I presume sales would dry up completely. But how long does it normally take for vendors to react, and how sensitive to fluctuations are they? Obviously we're talking about individuals here, not a cartel, so I'm just asking in terms of usual practice.
I have noticed that vendors do not react price wise on their goods when the value of bitcoin goes up. However, they clearly do when the bitcoin is devalued.
This reminds me of Canada/US pricing - which I doubt many Americans notice but Canadians certainly do. So, for example, paperbacks will have two printed prices, in USD and CAD, and Canadians pay the CAD. But what happens when the exchange rate wildly fluctuates? Well that seems to depend. When the CAD takes a hit, booksellers are very quick to react, plastering the books with stickers having an even higher price to make up the loss in exchange. When the CAD climbs, standard practice seems to be to whistle and stare at their shoes.
Vendors don't need to react to prices in BTC value because the SR system already takes care of that automatically. If a vendor keep their listings tied to dollars (which almost every vendor does) then they receive the same dollar amount worth of BTC no matter what the price is. For example, if a vendor has a listing up for $100 and the current price of 1BTC is $10, then the vendor receives 10BTC. If the price of BTC suddenly doubles to $20, the vendor will receive 5BTC when someone purchases their listing. Either way, the vendor gets $100. If vendors had to manually adjust their prices to adjust for fluctuations in BTC price, everything here would be way more expensive, because every vendor would be at risk of losing a lot of money any time the BTC price drops. The vast majority of vendors keep everything tied to the dollar because bitcoins are just too volatile. Jonnybag007 is mistaken in both of his claims that vendors manually adjust their prices to compensate for the currency fluctuations, and that prices are increasing due to the price of BTC going up.
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ilovebeees said it perfectly. If I didnt have the option to tie my listing prices to the dollar, I would not be able to vend here. BTC are very volatile. It would be impossible to keep track of that all day, adjust prices accordingly, package orders, and respond to messages.
**MissSnowGo**
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Oh, very cool. Thanks for the explanation!
Is there an obvious way, other than whether or not the prices shift if you're that observant, to tell if the vendor's goods are tied to bitcoins or dollars? I've only seen the user option to list all prices in one or the other.
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I think someone mentioned it. But, the system is automatic. If you price something at 15 dollars, it will stay close to that 15 dollars, doesn't matter if the bitcoin goes up or down...
BTW, tis the season to buy bitcoins....
~Flush
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Does it use the 24 hr low price? If so that's about $12.65 rather than the current price of $13.37.
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Does it use the 24 hr low price? If so that's about $12.65 rather than the current price of $13.37.
No, I believe it takes the average 24hr price from several exchanges, and takes the average of those. I don't remember which site they use to get that data, but I'm sure someone else here knows. It always stays pretty close to the Mtgox 24hr average. You can always check the going rate just by adding something to your cart and it will tell you the current rate right below where it says Total.
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i hear ya man. it does get frustrating. back in the early summer bitcoins were valued at $4.91 and now they are over $13. i went away for 4 months for legal issues with $800 in my account and returned to find i had over $2200 in my account. That was an intensely pleasant surprise. I try to buy my BTC a day or 2 before i am going to make a purchase to avoid BTC fluctuation. I usually make purchases valueing several thousand dollars now and BTC fluctuation can really hurt that.
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Threads like this give me no hope for humanity. If you are holding BTC, you should be happy because you have more buying power.
If you are buying BTC for a purchase, what's it matter? You buy $50 worth of BTC regardless if it costs $1/BTC or $50/BTC. You're still spending the same amount of money. The vendors do not need to change their pricing because BTC appreciates in value.
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Why is bitcoins so high now.
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Threads like this give me no hope for humanity. If you are holding BTC, you should be happy because you have more buying power.
If you are buying BTC for a purchase, what's it matter? You buy $50 worth of BTC regardless if it costs $1/BTC or $50/BTC. You're still spending the same amount of money. The vendors do not need to change their pricing because BTC appreciates in value.
If dealers don't adjust their prices then the return on your investment is taken as profit by the dealers and anyone buying today has to pay more. That's a price increase however you look at it.
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Cant bicoins stay at one price. Thats really gay up and down prices. Compalin to MTGOX
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Cant bicoins stay at one price. Thats really gay up and down prices. Compalin to MTGOX
Judging from your other posts you need to do a LOT more reading about Bitcoin and Silk Road in general. Read the Buyer's Guide in full, the Seller's Guide in full (in order to gain a greater understanding of how Silk Road works), the Silk Road Wiki and do a search for "Bitcoin" using a search engine to gain even a preliminary understanding of what Bitcoin is, what Mt.Gox is, and why bitcoins fluctuate in price. ::)
Links that you need to follow and read thoroughly:
Buyer's Guide:
http://silkroadvb5piz3r.onion/silkroad/buyers_guide
Seller's Guide:
http://silkroadvb5piz3r.onion/silkroad/sellers_guide
Silk Road Wiki:
http://dkn255hz262ypmii.onion/wiki
- grahamgreene
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i switched from btc to dollars on my page so i dont have to use a calc all the time.im glad a lot products are tied to the dollar helps out a lot
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Oh wow. Just, wow. MtGox is really gay for going all up and down with BTC prices -- oh yeah. Totally. I feel you.
... oh my God, I'm dying... I'm sorry, that's just so hysterical. I mean it makes perfect sense, of course somebody with no clue about Bitcoin would come to that conclusion, but it's so far from anything I ever expected to hear somebody say that it's fucking hysterical :)
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Guys, seriously. This thread is stupid. Anyone who thinks that vendors have to accommodate prices due to bitcoin fluctuation has never taken Economics 101 or any other class in economics.
99.99999999999999999999999999999999999% of venders here peg their listings to the dollar. The increase in BTC:Dollar price does not mean anyone has to drop their prices. $100 still buys $100 worth of bitcoins.