Trading Volume Indicates $1M+ Revenue to BTC China in First Week With Fees | Hacker News Reader

Trading Volume Indicates $1M+ Revenue to BTC China in First Week With Fees

thegenesisblock.com

17 pointsTwoFactor6 comments

Math alert:

... BTC China has facilitated approximately 340K XBT / ¥1.25B in trades. At the officially-stated 0.3% fee for buyers and sellers, that’s approximately ¥3.75M ($615K)...

There is a buyer and a seller for each trade so it should be 0.3% * 2 * ¥1.25B which is ¥7.5M. So they made twice as much as the article claims which is good for them but the 1st derivative of revenue curve is pretty steadily decreasing which is bad for them.

edit: Just thought about this a little bit more. This means there is a 60bps fee to go from an actual currency to bitcoin and vice versa. When you use bitcoin as a payment mechanism the buyer converts his currency to bitcoin, payment happens, then the seller converts bitcoins back to actual currency. So the exchange pockets 120 bps on every transaction where bitcoin is used exclusively as a payment technology. That's approaching Visa / Mastercard levels of transaction fees... not a bad business.

You're double counting the yuan fees and ignoring the bitcoin fees. The exchange makes 0.3% on the 340,000 XBT (1,020 XBT, or about 625,000 USD) and 0.3% on the 1.25 billion yuan it was traded for (3.75 million yuan / 615,000 USD). The buyer and seller each only pay fees on one side of the trade in the currency they obtained in the transaction.

edit: That's why the section you quote only has around half of the figure shown in the headline.

Yes you're right. I misread that section. That is an interesting way of collecting fees. It still works out to 60bps per trade just half is in currency and half is in bitcoin (which I guess they then convert to currency).

I don't think that invalidates any of what I said about exchange revenues as a fraction of transaction value for bitcoin as a payment technology though.

Probably ends up being less than 2. If you're doing any meaningful amount of volume on an exchange you try to get rebates for your trading fees. Most exchanges are willing to negotiate this point as you are helping them generate revenue.

That's great for BTC China, but this new found revenue stream may be short-lived unless the owner (Bobby Lee) can find other ways allow for RMB deposits to go through as they were effectively shut off almost a week ago according to guidance from the Chinese central bank (aka. PBOC)[1].

[1] http://www.coindesk.com/bitcoin-price-falls-btc-china-exchan...

Is this to suggest exchanges could be manufacturing rumors to increase their profits?

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