77
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 ...
58
I noticed this question was posted a long time ago and perhaps things have changed so I took the liberty to dig in again and also aggregate most of the answers given here and here’s what I found:
It’s indeed impossible to buy Bitcoins with Paypal DIRECTLY even today and it's mainly because of Paypal’s TOS (Section 3.7 here) and the issues of chargeback.
...
41
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 ...
23
To actually try and answer your question, Mt Gox acted as a trusted middleman in btc trading, and thus had to have control over their users money.
Let's say dude A has a few btc he wants to sell, and dude B has a few dollars he wants to buy btc for. B doesn't want to pay until A sends him the btc, and A doesn't want to send his btc to B until B pays. ...
14
People had bitcoins loaded on Mt.Gox internal trading accounts (trading wallets). This goes both for fiat currency and bitcoins.
Bitcoin withdrawals were shut-down for a few weeks now, which created concepts like "goxbucks" or "goxcoins" as you could not get any Bitcoins out.
Now, the Mt.Gox is closed completely, so you cannot get either fiat currency or ...
13
Mutum Sigillum LLC was the legal entity that Mt. Gox used for transferring funds using account-to-account transfers and for adding to (and withdrawing from) their account using bank funds.
Mutum Sigillum LLC is not registered as a money transmitter in any states.
It may not even be registered as a Money Service Business (MSB) through FinCEN.
FinCEN ...
11
Here's a good interview by Gregory Maxwell himself who's a Bitcoin developer:
Oh there is a “problem” in the Bitcoin protocol, known since at least
2011 (see the link I gave). But for normal applications, not involving
unconfirmed transactions, it shouldn’t cause any severe problems
because wallets can handle it locally.
This has to do with ...
11
This is generally called counterparty risk - if your resources are in custody of someone else, there is a risk that they go bankrupt and you lose it. And in that case it is too late and your options are limited to making a sadface :( and writing it off as a loss - do note that you can get x% of the loss back from your income tax in most places.
There are ...
10
What malleability means is that you can't store the transaction ID that bitcoind returns from its sendtoaddress API call and expect that number to mean anything at all later.
Instead, if you want to keep track of a high volume of outgoing transactions, you have to wait for the transactions to be fully confirmed and immune to blockchain reorganizations, and ...
10
It also shakes confidence in BTC both for the BTC community and the public in general. When I say BTC I am encompassing all other *coin. It is analogous to the failure of a large bank--except without any insurance.
9
It is because it is more expensive and has delays longer and more unpredictable to get $USD out of MtGox, and because they are facing regulatory and lawsuit problems. US branch of MtGox, known as Mutuum Sigillum, may bankrupt or get more assets seized. Simply put, a dollar at MtGox is not worth as much as a dollar elsewhere. MtGox is more accessible/less ...
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! ...
7
Mtgox owner was already in japan and already had his company there when he decided to buy mtgox from historical owner Jed in 2011.
mtgox owner s blog : http://blog.magicaltux.net/
hosting company that existed years before he decided to buy mtgox : http://legal.tibanne.com/ , services on https://www.kalyhost.com/
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
Mt.Gox' escrow wallet service only checks transaction hash. If anybody changes transaction hash before transaction is included into block, service considers transaction invalid and returns coins back to the owner's virtual account. But transaction itself is not invalid, it is finally accepted and coins are sent to the owner.
It is primary bug in Mt.Gox's ...
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
You are not going to like this:
Man-up and accept that you took a chance using MtGox and lost. The same applies to stocks, commodities, gold, etc. You decided to keep substantial funds in an unregulated exchange in an unregulated "currency".
What was lost was the amount in fiat currency represented by the BTC at the time you deposited them, not todays, ...
5
You're right that in this regard, Coinbase and Mt.Gox are similar: they control the private keys, and incompetence or malice on their part could result in the loss of your coins. One difference is that Coinbase doesn't keep a balance of USD (or other fiat) in your account, only bitcoins. The other major difference is that Coinbase has not (AFAIK) shown any ...
4
Quoted from BitcoinTalk:
As of 12:13pm on 5/14/2013, the U.S. District Court for the District
of Maryland issued a "Seizure Warrant" for the funds associated with
Mutum Sigilum's Dwolla account (a.k.a. Mt. Gox). In light of this
court order, procured by the Department of Homeland Security, Dwolla
has ceased all account activities associated with ...
4
In my experience requesting the full market depth from MtGox, often results in flat out incorrect information. To deal with this I've resorted to constructing my own, in a similar manner as you described above.
What I do is, using the websocket api, I look at all incoming depth events. I then keep two ordered arrays of bids and asks. On depth events if the ...
4
If your transaction from April still has no confirmation, it would be feasible to create another transaction that spends the same input to yourself. You could hope that your new transaction would be verified first, which would invalidate the other transaction and salvage your coins.
4
The sole and only reason to buy there, is because you already have fiat stuck there and you want to get it out ASAP.
About selling, if you are optimist you can say that some people value that the risk of Mt.Gox defaulting plus the time they have to wait without their money is less than the price difference with the other exchanges.
If you are pessimist, ...
4
I do not understand what do you mean by the current bitcoin price on the top (I can not see it), but I will clarify on some other numbers.
Last - the price of bitcoin based on the last transaction. So if I bought 1.2 bitcoins with a price of 950$ and this is the latest transaction so far, this number will appear in the last.
High - What was the highest ...
4
I received this email:
To whom it may concern,
At 5:00 p.m. on April 24, 2014, the Tokyo
District Court granted the order for the commencement of the
bankruptcy proceedings vis-à-vis MtGox Co., Ltd. (“MtGox”), and based
upon such order, I was appointed as the bankruptcy trustee (Tokyo
District Court 2014 (fu) no. 3830). The bankruptcy trustee will
implement ...
4
A popular opinion in the Bitcoin space is that transparency is key for Bitcoin businesses. Bitcoin and it's pseudonymous nature make it very suitable for scams and corruption.
Competitive fees or additional payment options are no longer the key to the success of an exchange. There are so many exchanges that you can almost certainly find what you need ...
4
MtGox has millions of USD missing according to the latest news reports. The final draft of what, where, how and why has yet to be published by the administrator however.
Some customers who lost money with MtGox are under the false impression that since their funds were in fiat currency instead of Bitcoin they would be safe and receive all of their money ...
4
Specifically:
They blamed transaction malleability for a hack, which was clearly a lie - blaming Bitcoin for their own mistakes.
They stopped withdrawals but continued allowing deposits and trading. A leaked strategy document shows that this was an attempt to conceal the size of their losses from the public, ie they didnt' come clean when they should have . ...
3
Here is the timeline for my deposit, which shows that at least one deposit was honored:
May 14 @ 10:14 AM CST --> Dwolla notified me that money was sent
May 14 @ 12:16 PM CST --> Dwolla notified me that DHS seized Mt Gox's account
May 14 @ 08:53 PM CST --> Mt. Gox notified me that funds from dwolla were deposited
I can't speak about other transactions with ...
3
As of this writing, Dwolla is not sending money to MtGox
This is verified by accessing their deposit link here
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