Hello,
I was wondering how do companies like bitpay, coinbase, circle get their bitcoins to sell to their customers.
What is the concept of Market maker and does it apply to such exchanges ?
If I were to open an exchange like coinjar or coins.pH in my country how will I be handling the bitcoin selling to customers. Where would i be buying the bitcoin from ?
Specially if sending money outside the country is only through expensive methods like western union who charge enormous fee and the project won't be viable.
I am expexcting more bitcoin outgoing then incoming so expcting to cover the sales from that won't be possible?
Please advice
Regards
Duke
Very nice question. All I can say is you are on the right track.
To answer your Q, if u follow coibase/bitpay news closely, u'll see they have corporate partners like wikipedia, overstock etc. who continuously dump their coins on them at a lower cost than market rate. This offers them the liquidity at hand. Moreover, they enjoy some privilege in international markets like Bitstamp, BTC-e for a 'better match against higher quote', because they are big trader and pillar of those exchanges. If I can recollect properly, coinbase had some issues with MK regarding this in Mt. Gox trade and hence they sued them in US court to block their funds in US. That started the fall of Mt. Gox. These are very deep and complicated relationship. So play wisely.