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 ...
59
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.
...
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 ...
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. ...
17
I just asked on the #mtgox IRC channel, and was told:
06:36 < dooglus> what does the "Open Transaction (6 Confirmations)" option
do when withdrawing BTC?
06:48 < Cory> If the Bitcoin address you're withdrawing to is a MtGox address,
it will use the network and blockchain anyway.
06:49 < Cory> Otherwise, if ...
16
Because Mt.Gox has to abide by anti money laundering laws they require at least some form of identification. Although this is a requirement for Fiat to Bitcoin conversion there is no need to link your normal bitcoin transactions to your Bank Account / Identity. Wallet services that deal solely with bitcoin do not need to comply with AML laws and hence ...
16
Properties of a yubikey:
A yubikey contains a secret symmetric key.
Knowledge of this key allows emulating that yubikey.
The server needs to know that key.
The YubiKey AES Key information can never be extracted from a YubiKey device – only programmed to it
So Mt.Gox's insistence on sending the key to you ensures several important properties:
You're not ...
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
All you'll ever get is speculation. Nobody knows why prices change.
It's just like when you listen to the news and they tell you that stocks dropped because of "profit taking". Clearly, people were selling if stock prices dropped. But nobody really knows if people were taking profits, cutting losses, or something else entirely.
These are emergent behaviors ...
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
if you want fast http ticker use the new fast_ticker :
http://www.reddit.com/r/Bitcoin/comments/1c9npl/mtgox_fast_ticker_last_only_no_rate_limit_1second/
http://data.mtgox.com/api/2/BTCUSD/money/ticker_fast
and you will get 1 second only cached minimalist ticker ( last )
if you need more ( low, high, volume ) you have the normal ticker, most probably ...
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
Mt. Gox operates a hosted (shared) EWallet. That means that the bitcoin address provided to you for making deposits is not your address, it is instead Mt. Gox's address that they will monitor and credit your account for for any coins received at that address.
But to withdraw, you are entirely at Mt. Gox's mercy.
Their terms of service, shown when you ...
6
Mt Gox is large enough to attract regular hackers. I had my account liquidated recently by a thief. Whereas I think some of their extra security apps might be beneficial (e.g. Yubikey) I thought a $25 investment to protect a $50 account was silly. Now I'm $50 lighter, so maybe it was not as unwarranted as I first thought.
Bottom line: Mind your security. My ...
6
The code is effectively just a long random string. When you create a redeemable code, a random string is selected, entered into the database at the exchange and associated with a currency and an amount. That string is your redeemable code. The string is long enough to make it very unlikely that anyone would be able to guess it in a reasonable length of ...
6
As said on https://en.bitcoin.it/wiki/MtGox/API/HTTP/v1#Multi_currency_trades you can use:
https://mtgox.com/api/1/BTCUSD/trades?raw
or
https://mtgox.com/api/1/BTCUSD/trades?since=0
to get all the historical data.
There's also a non-official Python script (using this API) and a SQLite database with all the historical data, you can find it on:
http://...
6
It is a moving sum, it sums up the volume for the last 24 hours of trade.
Bitcoin trading never closes, so the usual way of calculating volume as the sum of trades that happen between the open and close of the market doesn't apply.
6
It is the difference between current timestamp and the submission timestamp of the oldest order submitted, which has not yet been processed by the order book.
6
Mtgox charges the fee from whatever you're buying.
So if you buy 100 btc for however many USD, you'll buy the BTC, then you'll be charged 0.6% of your 100btc as fee.
If you buy 100 USD for however many BTC (i.e., sell some btc), you'll get your USD, and will be charged 0.6% of your 100USD as fee.
Edit: This is actually configurable. If you go to the mtgox ...
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, ...
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