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I am thinking about how are these all 'bitcoin shops' working. Imagine i go to a web page called http://bitcoinshop.smth where all i see is:

Price of the Bitcoin And all i can do is "Buy".

Of course the price of the BTC that they display is the lowest Ask price at the exchanges +X$ Fee they want to earn - makes sense.

Now the question is, what is happening behind the scenes?

I can imagine two situations:

a) They have BTCs in their wallet, so when i hit BUY - i get their BTCs out of their wallet at the price of the Exchange + their fee. But what if they bought them for 200$ and the price dropped to 100$ on the Exchanges? How do they manage that?

b) They are having market links to several exchanges and when i hit BUY they immediately place a BUY order on the exchange with the given price. Of course this is simplified as they should be looking into the order book and check the quantities and so on.. but nevertheless.

Still i see some issues: 1) They can't guarantee the order to be filled with the quantity i asked for, 2) They can't guarantee that at the time i hit BUY the price will be exactly as i wanted to buy. Well yes if the price goes down they get the money, but if the price goes up - well my BUY shouldn't be executed as i would have to pay more than i declared. This reminds me the old-days @ electronic exchanges - there was a regulation for this that the price has to be guaranteed for the buyer, but that's a different story.

Does anybody know how is that managed? And additional question, what if i come with a request to buy 10000 BTCs, i wonder how is that managed..

Example Shop: https://www.4coins.pl/en/

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Their wording is a little funny but it sounds like they act as a middle man and cannot guarantee a price until they have facilitated a deal. I assume the conversion rate shown on the main page is only an estimate. In that case they don't have to worry about price volatility as they are putting that burden on you the buyer.

§4 Terms and Conditions of Service

The Service uses the services of online payment provider Dotpay S.A., whose office is located at ul. Wielicka 72, 30-552 Cracow, Poland.

Using the 4Coins.pl via online payment provider user transfer funds to the 4coins.pl’s account in PLN currency. The amount received by the Service is reduced by 1.9 % of its value as a commission charged by the online payment provider.

Service under an order for the total service credited to the account searches offers on the market BTC – bitcoin and mediates on the principle of matching user with the available range of offers.

Due to the nature of the market BTC website does not guarantee the execution of transactions on the presented course. Given course is presented only in the form of information.

After the service, the user will be informed about the parameters of the transaction, and may order the withdraw of their units BTC – bitcoin.

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    Argh i didn't read it! Now it seems like you place an order, a) if they can fill it: you get the BTCs b) if they can't fill it: you get a message SORRY
    – PeeS
    Commented Oct 21, 2015 at 18:37

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