Quote from: nahtnam on December 09, 2013, 12:15:23 AM

Hi.

This is what I noticed about coinbase:
http://puu.sh/5GD6J.png

They have a $20 difference so they are making $20 + the fee. Is that right, or is it just better buying it somewhere else? Do other exchanges do it as well?

Coinbase acts as an exchange. People who have bitcoins and want USD, along with people who have USD and want bitcoins use coinbase to facilitate their transactions.

Lets say I want to buy bitcoins for 600/coin, so I post an "bid order", that tells people I'm willing to give them 600usd for a bitcoin.

A merchant has a bitcoin that he wants to turn into USD. He goes on coinbase, sees that I'm looking to buy a bitcoin for 600usd. He decides that he can do better, so he creates an "ask order", that tells people that he is willing to sell a bitcoin for $650usd.

On coinbase, thousands of these bid and ask orders are on the same exchange. When you see a buy price of $809.58, that means the absolute lowest ask order is selling some amount of bitcoins for $809.58 each. When you see a sell price of $786.10, that means that the absolute highest bid order is buying some amount of bitcoins for $786.10 each.

If you were to go on coinbase right then and buy a bitcoin for $809.58, the absolute best price you could sell it at is $786.10 because that's what the highest bid order is offering. If you're wondering where the extra $30 went, it goes to the guy who you originally bought the bitcoin from.