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Comment by blunte | Hacker News Reader

Not really. On most exchanges, the transactions never hit the blockchain - it's all internal accounting within the exchange.

All this speculatory activity creates liquidity, at least on the exchanges where the speculation is taking place. That's generally good for outsiders who need to exchange bitcoin for something else (on said exchange).

Except for a few flash-crash scenarios (or failures of the exchange), this shouldn't have much impact on price volatility on day/week scales that average people care about.

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I think it's possible for exchanges to exacerbate volatility. If all the trading were consolidated to a single exchange (like the NYSE or NASDAQ in America), it would mean that there would be more liquidity to the downside and price resistance to the upside, but instead everything is split up between 5 major exchanges. So if someone places a large order on one exchange, the others will mirror it, so effective liquidity is cut by 80%. This works to the upside too. A way to fix this would be to split the transactions evenly among all majors exchanges, executing all the orders at once instead of only at a single exchange, but most large traders probably don't do this.

Isn't that what Bitcoin Cash is for and why they split off? Bitcoin Core has super high transaction fees and will evolve not into a currency but a vehicle for wealth storage (much like gold).

No, even the Bitcoin Cash blockchain could not handle even a small percentage of HFT traffic. Like the poster above said, this activity is all internal exchange accounting.

I keep hearing about these high transaction fees but I've never seen them. When I send the equivalent of tens/hundreds of thousands of USD I pay a few cents of a dollar. It does take a few hours, sure. But what would it take in a fiat currency: walk to the bank, explain why you are sending so much money, set-up the order, wait a few days. No doubt with fees in the hundreds of dollars.

So as far as I can tell fees are still ridiculously small. Large transactions are usually not that urgent.

Are you actually sending that amount around?

Yes.

Not me, obviously, but check for example:

https://blockchain.info/tx/d977d0f521b2470d44a6222c3d8fa99da...

($400,000 transaction for $2 fee or a 0.0005% fee)

> But what would it take in a fiat currency: walk to the bank, explain why you are sending so much money, set-up the order, wait a few days. No doubt with fees in the hundreds of dollars.

When was the last time you sent a wire? For accounts with $15,000 minimums it's usually free, can be set up from your phone and, depending on your bank, either clears within minutes or by close of business.

Good point. I assume you are talking about national transfers (within the same country) and during the week?

What is your experience wiring $X0,000 abroad as a consumer?

My last international wire was for $60,000. It arrived same day in Switzerland. I set it up from Citi's iPhone app and paid nothing for it.

I assume using this?

> Citibank, which offers free international wire transfers to other Citi accounts through the Citibank Global Transfers service.

There is a major caveat. If you need to send money to someone who doesn’t have a Citibank account, the fee is a steep $35.

It's more complex than that. Both Bitcoin Core and Bitcoin cash teams want to scale things up, Bitcoin cash is doing it one way and Core another way (look for "Lightning Network"). Nobody in both camps want Bitcoin to remain a store of value, we all want it to replace fiat.

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