I have read that numerous high frequency trading firms build datacenters near equity exchanges to minimize the milliseconds necessary to get quotes and execute trades. In the case of buying and selling Bitcoin, is my broker's proximity to an exchange relevant? Have we seen Bitcoin brokers start to advertise trade execution guarantees?
1 Answer
Right now, generally no. As far as I know Bitcoin exchanges dont offer peering services, and they all use CDNs (like Incapsula) to prevent DDoS attacks. So moving closer to them isnt going to help much, because you're still going to have all your traffic pass through the CDN. If you were located in China and wanted to access a US exchange, then yes it would help a some, but if you're an American trying to access an American exchange, the lower latency would be negligible.
There aren't really Bitcoin brokers as there are stock brokers. With Bitcoin you generally deal with the exchange yourself, there isnt a middle man like a brokerage. The closest thing I know of to a broker in Bitcoin is BTX Trader, which will purchase coins for you at the best price from multiple exchanges.
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Thanks for the answer. I thought the concept of a trade execution guarantee would also apply to btc. I assumed that such a guarantee could only be made if they were close to the exchanges.– RohitJJun 16, 2014 at 18:25
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I think I edited my question while you were posting your comment. As my edit says, you deal with the exchanges directly most of the time unless you were using a service like BTX Trader. So your trades should execute immediately if the market is able to fulfill your order.– MattJun 16, 2014 at 18:27