In the past people exchanged goods for other goods or services but ways of trade have changed through time and today we use money to buy products or pay for services. The traditional way is to pay with money directly at the place of purchase, or even use, while auctions were usually held by art and real estate businesses. However, the attractive bidding system of auctioning was soon implemented into different levels of social life, especially in the digital environment of World Wide Web as thebidding websites or in other words thepenny auctions.
The old-fashioned auctions were held in real life, and the system was somewhat like the following: specific items were presented and the interested people would put bids on the value of these items until there was one bidder left, the one that was prepared to pay more than anyone else and this rule still stands with the bidding websites.
The crucial change appeared somewhere else, with the cost the other bidders have. In old days the bidders didn’t actually put money in every time they raised a bid, the winning bidder paid the cost after the auction finished and that was the only cost while in the penny auctions system every bidder loses his or her money that was put in the bidding process, not only the winning bidder.
This is also the most problematic part of the bidding websites, experts say, because it is not clear what happens to the money that people lost and why did they actually lose it. This has been a rising issue within the bidding communities as well. In California they have very strict laws about gambling and the auction bidding has an integral part of the chance in it hence it is considered as a gambling system. Experts say there will be other countries following the Californian legislation on the penny bids.
To understand this, the logic of the penny auctions should be understood first. The bidding on thebidding websites may start out at 1 cent, or penny, but each bidder raises the bet with his 1 cent contribution and after bidding 20 times he or she spent 20 pennies on the bid and the additional bidding fee multiplied by the number of bids which is 20 in this case. In other words, an item worth 100 can sell for 7 at the completion of the auction but in reality there were numerous bidders placing bids worth 20 pennies, which can all together sum up to much more than the original price of 100.
The general community accepted the penny auctions well; actually people are glad to see new opportunities arising. Users report that even when losing the bid it only costs few cents, while experts answer that it shouldn’t cost at all. Who would know, it could be said that the traditional auctioning system has its own set of rules, while the bidding websites have another, and the Canadian gambling moment is exactly what makes the penny auctions so interesting, people say.