76

Many people already do this with bitcoin. In finance, this is called arbitrage trading, or simply arbitrage, sometimes even abbreviated arb. The reason for the price differences are fees for transferring between the bitcoin exchanges (you have to transfer both, bitcoins and fiat currency for a complete cycle) and fees for trading bitcoins against fiat ...


70

Arbitrage - What it is and how it works Arbitrage refers to the process of instantly trading one or more pairs of currencies or odds for a nigh risk-free profit. Usually, this involves two exchanges (this is then called a two-legged arbitrage); although more are, of course, possible. There are several steps when executing an arbitrage: Find a suitable ...


40

I've writen software to arbitrage on some US exchanges. I couldn't arbitrage without software because: It was hard to account for all fees to understand if an opportunity is profitable. It took a couple of minutes to evaluate opportunities (query an exchange's order book, query another exchange's order book, do an evaluation, execute a sell, execute a buy) ...


23

What's stopping people from doing so? What's the catch? The catch is that few people have been able to get US dollars out of Mt. Gox since June 20, 2013, when Mt. Gox imposed a "hiatus" on US dollar withdrawals. Mt. Gox has a long list of excuses for not paying their debts, which you can find on their site. Some of their excuses strain credulity. This ...


22

There are a variety of variables that affect Bitcoin pricing on the exchanges. Some are: Market size Exchange volume Price of entry Market size: Relatively speaking, the market for Bitcoins is small. In April of 2013 it was about 1.2 billion USD, and a few days later dropped to below 750 million USD. That's a small market cap, which means, among other ...


15

After studying Bitcoin Arbitrage for the past few months, I've developed an information service to answer this question. CoinThink.com gives a complete picture of arbitrage. All asks that have a bid at a higher price (on another exchange) are tallied into a total opportunity amount, including the fees for each exchange. It also makes an estimate on the fee ...


8

One of the major reasons standing in the way of profiting from arbitrage opportunities has to do with "volume". The volume for either exchanges is not high enough yet to support big trades. Large profits require large trades (in arbitrage). Making $1,000 may be feasible between exchanges, but that's an extreme best case scenario and using 10k in capital! ...


6

Observations Mt.Gox is currently offering neither fiat withdrawals, nor Bitcoin withdrawals. No withdrawals means that the Mt.Gox price is completely decoupled from the Bitcoin market, as there can be no arbitrage to close the gap. Precursors Mt.Gox has handled the Malleable Transaction issue poorly, and squandered the trust of a lot of its users. ...


6

Something I am currently looking into, and a huge issue that nobody has really mentioned earlier is blockchain time. 1) Bitcoin is traded on a number of exchanges, however the entire process of buying on one exchange, transferring to another exchange and selling on that second exchange can take on the order of magnitude of 30 minutes(~10 minutes per block ...


6

This is possible and many people do it, but the loop can be significantly delayed by the time it takes to transfer fiat between exchanges. There may be automation software out there, but it is likely closely guarded by those who employ it. There is still the manual step of coordinating fiat movement.


5

See this pdf for more information. If you were asking about a two currency arbitrage between different markets. For example, the BTC/USD exchange rate at MtGox and one at Intersango then the following formulas apply considering brokerage fees at both exchanges. For simplicity I am using BTC as the base currency and USD as the quote currency, but you can ...


5

ga bitbot from the project page: ga-bitbot is a distributed genetic algorithm tuned automated mtgox trading system for Bitcoin which includes market data collection, gene client/server, reporting tools, and automated trading. The intention of this project is to create a high frequency capable trade platform for the bitcoin p2p currency. bitcoin ...


4

I wrote a simple market maker bot in Python: https://github.com/chrisacheson/liquidbot This software allows you to place orders on MtGox market. Liquidbot uses ezl's wrapper code to interface with MtGox: https://github.com/ezl/mtgox Aricie runs a hosted market maker bot platform: https://dnnbitcoin.aricie.com/default.aspx


4

CryptoStreet will allow exactly that. (disclaimer: I'm one of the owners). We will hold funds at the various exchanges and you hold funds with us. That'll allow you near instant trades across various exchanges and enjoy arbitrage


4

Mtgox uses a multi currency trading engine that matches trades between the different currency pairs. All trades are drawn from the one pool. Trades in one currency are matched against trades in another currency using ECB exchange rates, and tacking on a 2.5% fee. See Mtgox FAQ for further info: https://support.mtgox.com/entries/20800336-Multi-Currency-...


4

In a market exchange, price is determined as being where buy and sell orders meet. Buyers not needing bitcoins immediately are then most interested in obtaining bitcoins at the lowest price possible. Sellers not needing cash immediately are then most interested in obtaining the highest price as possible. Because of differences in deposit and withdrawal ...


3

I'm not a lawyer. In the U.S., the lack of mens rea in your example would not cause you to have violated any laws. As a person selling your coins, it is not your responsibility to determine your buyer's intentions. Of course, this is not quite so simple. Money transmitters have regulations that include AML/KYC (know your customer) requirements which ...


3

To answer your first question: I do not know any free, opensource, trusted software that arbitrages for you. It will not generate any money for the developers, and only depletes their source of income. To calculate the profit in arbitrage you first have to know all the steps: Buy a Bitcoin for $600 (rate #1) on exchange A (trading fee #1) Send this ...


3

First, to clear things up, it isn't up to the exchange to quote a certain price/rate. It's all up to the users of that exchange what they ask/bid for a bitcoin. For example there are two exchanges, X and Y, with both have an ask one 500 USD and a bid on 400 USD. Then person A bids a higher price, lets say 470 (instead of 400), on exchange X. Person B asks a ...


3

The formula for sell_order_Net_total will be: sell_order_Net_total = sell_amount * sell_price * (1- sell_ex_txn_fee) The final profit: Profit = sell_order_Net_total - buy_order_Net_total Keep in mind that there are also transaction fees between the two exchanges. If you have traded all your DOGEs for BTC on 1 exchange, and BTC for DOGEs on the other, ...


3

Sure it's legal. Unless either country has outright banned buying/selling Bitcoins. I don't think there's any country that has gone that far. You may have to report income/profit/trades to your tax office, depending on local laws. In some countries you may need to pay VAT as well. Setting up accounts with (foreign) exchanges means that you are entrusting ...


3

To be more specific about the "arbitrage strategies" in Tanmay's answer: Suppose there were a difference in price between two exchanges: at A the price is $10,000 and at B it is $10,100. Then, in principle, someone could turn a quick and risk-free(*) profit by buying coins on A, transferring them to B, and selling them for the higher price. This is called ...


2

The force keeping the exchange rates of various currencies in balance is the same force keeping the exchange rates the same across multiple exchanges: Arbitrage. When the value of Bitcoin is different enough that one could buy cheaply for one currency then sell for a profit in another, or in the same currency across multiple exchanges, people will do just ...


2

The best way to transfer between exchanges without fees is bitcoin. Coupons (like mtgoxusd) used to be very nice, but now it seems fees are often charged in addition to some of the coupons becoming unreliable. An arrangement in #bitcoin-otc may work well at a low fee, but -otc isn't often quick. In consideration of these two facts, I've come to the ...


2

You can try this one also https://github.com/rokj/bitcoin_dealer. From the README file on the repo: Bitcoin dealer is simple Django program (trading bot) for trading bitcoins currently only on MtGox exchange. Bitcoin dealer supports MtGox API version 1 with following currencies: USD, EUR, GBP, PLN, CAD, AUD, CHF, CNY, NZD, RUB, DKK, HKD, SGD, THB, JPY and ...


2

I think, at the moment you took those numbers, MtGox halted trading for several hours, freezing it's price. Other markets continued trading and their prices went down. That's why MtGox seems to be so high. The only real difference then is btceUSD and bitstampUSD, with a difference of 7 USD. I'd guess this was due to the fact that those markets are less ...


2

The laws that apply depend on your country of residence. There usually exist some sort of Know Your Customer (KYC) regulation which requires you to check the background if the sum in the trade is very large or your customer has odd buying patterns and you should suspect illegal activity. Also if you trade money professionally you might need to acquire some ...


2

I have been wondering about it myself for a long time now. I even thought of developing trading software (bot) that would automatically buy on one exchange and sell on MtGox. The price difference between BTC-e and MtGox can be as high as $100/BTC. The problem is how to get your cash (US$) out of MtGox? Last time I tried, I waited - in vain - for almost 5 ...


2

There are in fact a considerable number of people/institutions doing this already, and the proprietary software is getting smarter and significantly outperforms the opensource projects. It should come as no suprise that existing currency arbitrage software has been adapted to this task by trading companies very successfully, so if you are thinking of getting ...


2

As my comment says, if you were to buy any BTC on Mt. Gox, you have no way of transferring it elsewhere or spending it. All outbound transfers are turned off, and people have no way of knowing if or when transfers will resume. There's a belief that Mt. Gox is insolvent or will be shortly. Whether that is true remains to be seen. But if Mt. Gox does indeed ...


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