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
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
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, ...
5
From the Mt. Gox API Documentation:
Order lag
https://data.mtgox.com/api/1/generic/order/lag
The "lag" value is the age in microseconds of the oldest order pending execution. If it's too large, it means the engine is busy, and the depth is probably not reliable
5
From the (unofficial) MtGox API documentation:
The minimum trade size to buy OR sell is 0.01 BTC
5
You need to buy bitcoins on MtGox using another currency. These bitcoins will show up on your MtGox account.
You can then withdraw these bitcoins from your MtGox account to your own wallet. You can find this under Funding options > Withdraw funds > Bitcoin. Enter the address your wallet gives you and MtGox will send your coins to that address so that ...
5
Yes you can spend an unconfirmed output.
You can see this in MultiBit if you:
1) Send some bitcoin from one wallet to another.
2) In the wallet that received the bitcoin you can spend it. Because the bitcoin came from one of your previously confirmed transactions, you can trust it even though it is unconfirmed.
Of course, if you spend a transaction that ...
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
According to MtGox, the hacker got about 2000 BTC. A few real customers also appear to have purchased bitcoins at an artificially low price during the incident, withdrawn them, and kept them. This is estimated to amount to less than 650 BTC.
The details given at the above link are:
~June 2011 Mt. Gox Incident
Time: 2011-06-19T18:00 ± 1 h (theft), days ...
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
If you are referring to the volume displayed at the top of their site, that's a rolling 24 hour number.
If you are referring to the volume displayed in BitcoinCharts, then that is 00:00:00 to 23:59:59 UTC.
Also, the Bitcoin Charts metrics are per-market, so BTC/USD has its own volume as does BTC/EUR, BTC/GBP, BTC/JPY, etc. Whereas the volume number from Mt....
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