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Bitcoin Arbitrage
Posted on 6/27/13 at 12:25 pm
Posted on 6/27/13 at 12:25 pm
I know this will immediately result in a BTC pissing match but here goes.
I did a quick search for "Arbitrage" and haven't seen this topic discussed since Russian mentioned it during the April crash. He asked why no one was taking advantage of the BTC arbitrage opportunities. At the time, most sites were unable to handle the volume and that most purchases were delayed by hours, so it would be incredibly risky to try and buy from one market and sell to another because of the extreme fluctuations.
Now that the price seems to be relatively "stable" and sites aren't freezing trading, can anyone comment on if people are taking advantages of this opportunity? If you go to this page you can toggle between the BTC marketplaces for GOX, Bitstamp, BTCE and Campbx.
As I am typing this post the prices are as follows:
GOX 102.01
Bitstamp 98.07
BTCE 97.33
Campdx 97.86
I have looked at the pricing for these markets over the last week and these results are typical. GOX is always the highest by 4-5 dollars.
I haven't gone to each of these websites, nor to I plan to purchase BTCs from them, but are there hidden fees for the others that I am unaware of that would reduce your profit from continuously buying BTC from one market and selling it back on another? Can anyone comment on the realistic timetable for how long it would take to purchase, transfer and sell a BTC to complete this process?
I am well aware that some of these marketplaces are fraudulent and there are additional legal risks and the risk that the price fluctuations that would/should discourage this type of activity. I am more interested if someone can comment on any technological barriers that prevent someone from doing this.
***If this has been discussed recently and the search did not pick it up, feel free to delete.***
I did a quick search for "Arbitrage" and haven't seen this topic discussed since Russian mentioned it during the April crash. He asked why no one was taking advantage of the BTC arbitrage opportunities. At the time, most sites were unable to handle the volume and that most purchases were delayed by hours, so it would be incredibly risky to try and buy from one market and sell to another because of the extreme fluctuations.
Now that the price seems to be relatively "stable" and sites aren't freezing trading, can anyone comment on if people are taking advantages of this opportunity? If you go to this page you can toggle between the BTC marketplaces for GOX, Bitstamp, BTCE and Campbx.
As I am typing this post the prices are as follows:
GOX 102.01
Bitstamp 98.07
BTCE 97.33
Campdx 97.86
I have looked at the pricing for these markets over the last week and these results are typical. GOX is always the highest by 4-5 dollars.
I haven't gone to each of these websites, nor to I plan to purchase BTCs from them, but are there hidden fees for the others that I am unaware of that would reduce your profit from continuously buying BTC from one market and selling it back on another? Can anyone comment on the realistic timetable for how long it would take to purchase, transfer and sell a BTC to complete this process?
I am well aware that some of these marketplaces are fraudulent and there are additional legal risks and the risk that the price fluctuations that would/should discourage this type of activity. I am more interested if someone can comment on any technological barriers that prevent someone from doing this.
***If this has been discussed recently and the search did not pick it up, feel free to delete.***
3
Posted on 6/27/13 at 12:31 pm to Waffle House
Arbitrage is a popular topic on the bitcoin boards but it doesn't seem like anyone had successfully done it. The prevailing thought is that the USD transfers take too long to make it feasible
On phone. Will comment more later when I get to a computer
On phone. Will comment more later when I get to a computer
Posted on 6/27/13 at 1:45 pm to Waffle House
Per your link, there were 15,366 Bitcoins traded in USD in the last 24 hour period as of 1:30PM CDT. 5,980 of those Bitcoins were traded on the non-MtGOX markets. That is not much volume to engage in arbitrage. Your efforts to buy on the non-MtGOX markets and sell on MtGOX would likely shrink the price spread and reduce the gains from successful arbitrage trades. When you factor that in with the inefficient processing of trades, the questionable reliability of the market operators, and the risks of price fluctuation, many have determined it is not worth the effort to engage in arbitrage of Bitcoins. Now the decision is influenced by MtGox's issues with the U.S. government and its inability to use U.S. banks.
Posted on 6/27/13 at 2:01 pm to Poodlebrain
I agree with you that it isn't really worth the effort to do so for most people.
However, there are people that spend tons of money trying to mine BTC. It just seems like they would be better off trying to buy and sell bitcoins and retain the fractional differences in value.
In a simplistic view, buy 1 for 95 and sell .95 at 100. You break even on money and are left with .05 BTC from the transaction.
Again, it seems rather tedious and somewhat stupid, but then again spending thousands of dollars on start-up costs for mining does to me as well. I just didn't know if it was common for people to attempt to do it and that is why you see all of transactions for tiny fractions of a BTC.
However, there are people that spend tons of money trying to mine BTC. It just seems like they would be better off trying to buy and sell bitcoins and retain the fractional differences in value.
In a simplistic view, buy 1 for 95 and sell .95 at 100. You break even on money and are left with .05 BTC from the transaction.
Again, it seems rather tedious and somewhat stupid, but then again spending thousands of dollars on start-up costs for mining does to me as well. I just didn't know if it was common for people to attempt to do it and that is why you see all of transactions for tiny fractions of a BTC.
Posted on 6/27/13 at 2:03 pm to Waffle House
You question is very valid. Obviously if there was money to be made arbitraging between the various BTC exchanges, someone is already doing it.
My only elaboration to what Poodle wrote is if you bought BTC on an exchange that consistently has a lower price and then transfer the BTC you bought to MtGox and sell on that exchange at their usually higher price, you can't get your $$ out of MtGox now since they have "temporarily" suspended withdrawals of U.S. dollars from customers' accounts.
Also, at least one of the exchanges (I forget which one I read about several months ago) charges a transaction fee per transfer. I forget how much that fee was but it was not insignificant.
My only elaboration to what Poodle wrote is if you bought BTC on an exchange that consistently has a lower price and then transfer the BTC you bought to MtGox and sell on that exchange at their usually higher price, you can't get your $$ out of MtGox now since they have "temporarily" suspended withdrawals of U.S. dollars from customers' accounts.
Also, at least one of the exchanges (I forget which one I read about several months ago) charges a transaction fee per transfer. I forget how much that fee was but it was not insignificant.
Posted on 6/27/13 at 3:10 pm to LSURussian
If there were a fluid way to move money in and out, arbitrage wouldn't really exist. So it's this factor that prohibits it anyway.
Posted on 6/27/13 at 3:41 pm to LSURussian
quote:
Also, at least one of the exchanges (I forget which one I read about several months ago) charges a transaction fee per transfer. I forget how much that fee was but it was not insignificant.
This is probably the biggie. Transaction fees would eat you alive, especially considering the low volume traded.
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