Insane BTC to XAU exchange rate on RippleTrade

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Insane BTC to XAU exchange rate on RippleTrade

Postby stephenrs » Tue Aug 12, 2014 10:48 pm

I'm new at this, so any insight that anyone can provide would be helpful...

I performed my first very small test conversion from BTC to XAU on RippleTrade recently, expecting that the conversion would be performed at the standard conversion rate (as published here: http://preev.com/btc/xau), but found out that this was not the case. More specifically, to receive 0.00005 XAU, I needed to pay about 0.000348 BTC - which works out to about 0.1417XAU for 1 BTC - or about $4000 USD per ounce of gold! Since the current price of gold is about $1300 USD, something just doesn't seem right.

So, I'm wondering if there's something wrong with RippleTrade (I've run into bugs in the past), or if I'm just trading into a highly illiquid market and paid a ridiculous asking price(?) Anybody know how this works?

Since there's very little information on the RippleTrade website regarding how conversions are processed (as opposed to actual bid/ask trades), I thought I'd see if there was someone here who could shed some light. Also, I've already reported this on the RippleTrade issue tracker, but maybe developers aren't the best folks to ask about this sort of thing.

Thanks
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Re: Insane BTC to XAU exchange rate on RippleTrade

Postby yvv » Tue Aug 12, 2014 10:54 pm

stephenrs wrote:
So, I'm wondering if there's something wrong with RippleTrade (I've run into bugs in the past), or if I'm just trading into a highly illiquid market and paid a ridiculous asking price(?) Anybody know how this works?



You are just trading in highly illiquid market and paid a ridiculous asking price. You'd better leave a bid order in a trade book and wait for somebody to take it.
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Re: Insane BTC to XAU exchange rate on RippleTrade

Postby stephenrs » Wed Aug 13, 2014 12:18 am

yvv wrote:You are just trading in highly illiquid market and paid a ridiculous asking price. You'd better leave a bid order in a trade book and wait for somebody to take it.


That's what I was afraid of, thanks for the clarification. Ah...the bleeding edge is always interesting :)
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Re: Insane BTC to XAU exchange rate on RippleTrade

Postby shekenahglory » Wed Aug 13, 2014 12:57 am

stephenrs wrote:
yvv wrote:You are just trading in highly illiquid market and paid a ridiculous asking price. You'd better leave a bid order in a trade book and wait for somebody to take it.


That's what I was afraid of, thanks for the clarification. Ah...the bleeding edge is always interesting :)


if its GBI XAU you are interested in, the market on USD.bitstamp to GBI XAU has a more reasonable spread.
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Re: Insane BTC to XAU exchange rate on RippleTrade

Postby bibbit » Wed Aug 13, 2014 3:13 am

shekenahglory wrote:if its GBI XAU you are interested in, the market on USD.bitstamp to GBI XAU has a more reasonable spread.


It would also be useful to know which gateway's BTC he is using since Convert should have found a good path from BTC.bitstamp to USD.bitstamp to XAU.gbi. It is entirely possible that the liquidity issue was with his BTC if he was using a neglected gateway.
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Re: Insane BTC to XAU exchange rate on RippleTrade

Postby prap » Wed Aug 13, 2014 3:18 am

Phil from Ripple Labs here.

Market makers are quoting XAU.gbi versus USD.bitstamp and USD.snapswap. The market vs. USD.bs is currently $1309 - 1328 during the night in NYC. It's quoted 24 hours a day, but liquidity is often better during US market hours (the market is often $1-2 wide during US hours).

Some people have started quoting XAU against XRP and BTC.snapswap, but it's been more intermittent, because some firms only keep the market making bots running during business hours when humans are watching. We're working on improving direct liquidity to BTC and I know the team has been doing work on pathfinding as well.

Thanks for your patience! I think it's really cool that people can spend XAU at any merchant where bitcoin is accepted via the bitcoin bridge, so we'd definitely like to improve that experience.
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Re: Insane BTC to XAU exchange rate on RippleTrade

Postby stephenrs » Wed Aug 13, 2014 5:45 pm

shekenahglory wrote:
if its GBI XAU you are interested in, the market on USD.bitstamp to GBI XAU has a more reasonable spread.


Thanks for all the replies.

Yes, GBI XAU is what I'm interested in, but how can I access "the market on USD.bitstamp to GBI XAU"? Do I need a Bitstamp account? Is there another marketplace/exchange (other than RippleTrade) that I should turn my attention to?

Again, please bear with me, I'm still trying to wrap my head around how all of this fits together.
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Re: Insane BTC to XAU exchange rate on RippleTrade

Postby stephenrs » Wed Aug 13, 2014 5:57 pm

bibbit wrote:
It would also be useful to know which gateway's BTC he is using since Convert should have found a good path from BTC.bitstamp to USD.bitstamp to XAU.gbi. It is entirely possible that the liquidity issue was with his BTC if he was using a neglected gateway.


Since my RippleTrade account is funded with BTC, I'm assuming I'm using the Ripple Labs BTC gateway (please correct me if I'm wrong). Do I need to add other trust relations or gateways to my RippleTrade account to ensure efficient paths?

Also, based on what I'm seeing in my transaction history, it looks like the path my test trade took was BTC -> XRP -> GBI XAU (I've added GBI as a trusted provider)...and RippleTrade's book on XRP to XAU is extremely thin, with an astronomical spread - which I suppose could explain the pricing I received(?)

Also, I'm not at all sure I like the idea that I needed to pass through an XRP conversion to get to XAU - not only because of the additional exchange rate risk and lack of liquidity, but because as far as I can tell XRP is centrally controlled by Ripple Labs...which seems exactly contrary to the spirit of alternate/digital currencies...in other words, what's the point of exchanging BTC for gold if I still need to pass through a "central bank"? Am I missing something?
Last edited by stephenrs on Wed Aug 13, 2014 6:19 pm, edited 2 times in total.
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Re: Insane BTC to XAU exchange rate on RippleTrade

Postby stephenrs » Wed Aug 13, 2014 6:04 pm

prap wrote:Phil from Ripple Labs here.

Market makers are quoting XAU.gbi versus USD.bitstamp and USD.snapswap. The market vs. USD.bs is currently $1309 - 1328 during the night in NYC. It's quoted 24 hours a day, but liquidity is often better during US market hours (the market is often $1-2 wide during US hours).


How can I take advantage of this liquidity? Where are the market makers conducting business, and how can I see what they are quoting and trade with them (if not on RippleTrade)?

Again, thanks to all of you guys for engaging with me (and my n00b questions) on this.
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Re: Insane BTC to XAU exchange rate on RippleTrade

Postby yvv » Wed Aug 13, 2014 6:41 pm

Man, you really need to go through "Ripple for Users" section on ripple wiki before trying to trade any assets.
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