The difference between the market value and the selling value (also known as the “spread”) is something that almost everyone finds annoying. Is Bitladon keeping a part for itself? In this article we will explain where this difference comes from and how it works.
Where does the difference come from?
Bitladon buys and sells its coins on various international exchanges. At the exchanges there is a buy and sell price for which we can buy or sell these coins. We call the difference between the two the 'spread', which differs based on the amount of trades at the given moment.
This difference usually changes per minute but can even be different every second. This differs per currency and per moment. There is a balance point where orders from the buyers and sellers meet. At the same time, there is always a gap, which fluctuates and moves as trade orders are resolved on the other side, causing the total price to go up or down. Sellers want to sell as high as possible and buyers want the price for which they buy a coin to be as low as possible. This forms the gap between the two called spread. That is why at any time the price you can buy at is higher than the price at which you can sell.
If there is an overlap between the two sides of the gap, the overlapping trade order is resolved immediately, and the price gap reappears. You will see this spread on every exchange in the world, both in crypto and in traditional stocks or any other asset traded on the stock exchanges. The lower price is known as the “bid price” and the higher is the “ask price” (the asking price). So price spreads are the difference between the highest buy order and the lowest sell order on a given exchange.
Why is that difference not on an exchange with live order books?
We are a broker, so we buy and sell your coins on different international exchanges. With us it works slightly differently than with an exchange. With an exchange you have to put your order in the order book yourself. The risk is that your order will not be filled (not immediately or at all), so that you lose an amount. In our case you press 'sell' and that risk is for us. We put the order in at the order book at a place where we are guaranteed that it will be filled. That's where the spread comes from.
Doesn't Bitladon keep this difference as a fee?
No, we do not earn anything from this except the transaction costs that you pay on your trades.
Why is the difference between market value and resale value so great in one currency and so small in another?
Because the spread depends on the trade. A currency like Bitcoin has a billion-dollar trade, where other coins are less than a million in 24-hour trading. As a result, the order book is also a lot smaller and the difference can be a lot bigger when you trade with larger amounts.