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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 ...
57
If you bought a bar of gold at $1200 / ounce, then the price of the gold drops to $600 / ounce, you wouldn't actually lose any money at all unless you decided to sell your gold at that time. However, if you wait until the price of gold rises to $1800 / ounce, then sell it, you will gain money. The key is an ounce of gold is still an ounce of gold, ...
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) ...
27
Basically there are five main ways of getting bitcoins:
Mining
Buying
Offering goods and services for Bitcoin
Obtaining for free through micro payment
Asking a friend who already has them to give a tiny fraction for free
Let's start with mining:
first of all I have to warn that currently there is almost impossible to mine by your own. You need to have a ...
27
If you bought one bitcoin and the price goes down, you still have one bitcoin. If the price goes up...still one bitcoin.
This is just like everything else, including groceries, gasoline, gold, stock certificates, etc... Measurements of value in fiat (such as dollars) does not affect the amount something you own, only the price at which you will be able to ...
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 ...
20
Setting up and operating an exchange can be quite involved.
A few tiers to start thinking about: legal, banking, tech+security, and volume.
Legal
The first question is whether you want to operate globally (e.g. Bitfinex or BitStamp) or focus on a national market (e.g. FlowBTC, meXBT). The next step is to seek legal counsel to help decide where you want ...
18
You need three components:
A user account system that allows users to register, maintain a balance, deposit and withdraw BTC and other currencies, and place buy and sell orders. You'll need to integrate this with a payment processor to support currency deposits and withdrawals.
A matching engine that looks at the current buy and sell orders and matches ...
15
Bitcoin is really a little strange because it doesn't know if it is a currency or a commodity. And this is why this question has many answers and is a popular item of discussion. If Bitcoin were just a commodity, the thing to do is to hoard it. There are lots of commodities that are almost totally hoarded. For example: emeralds or works of art.
Now if ...
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 ...
15
I am developing the ccxt cryptocurrency trading library, check it out on GitHub:
https://github.com/kroitor/ccxt
It is a library for cryptocurrency trading and e-commerce with support for many bitcoin/ether/altcoin exchange markets and merchant APIs.
With it you can access market data and trade bitcoin, ether and altcoins with more than 70 (!!!) ...
14
Yes, if someone buys at a particular price, someone else must sell at that price. But they didn't place their orders at the same time. The buy/sell indicates the direction of the filled order. This is needed to make sense of the price.
Imagine an apple exchange where no trades are occurring. Then someone walks in and buys or sells an apple for $1. Do you ...
14
In 24 hour markets High and Low usually mean "highest/lowest price in last 24 hours".
Open generally refers to the price at 12:01 AM UTC of any given day and close generally refers to the price at 11:59 PM UTC of any given day.
13
As the founder of bitcoin-otc, I think I'll be able to help you out here. :)
OTC uses gpg (the free software implementation of the PGP protocol) for authentication. So your first step is to register on OTC with your gpg key. The OTC wiki contains detailed instructions on this page: http://wiki.bitcoin-otc.com/wiki/GPG_authentication
The rating system is a ...
13
New offers and orders are matched respectively with the best order and offer available until they are fulfilled. If there is more than one entry at the same price, the oldest entry will be matched first. If a new entry cannot be matched completely, it will remain in the order book until the remainder is matched or it expires.
See an example below:
The ...
13
tl;dr- This is called a capital loss. You're said to realize the capital loss if you sell the Bitcoins at the lower price, such that you lost money due to having bought/sold them. However, note that this isn't legal advice and I'm unsure about what the current legal statutes are surrounding Bitcoin.
Bitcoin's a capital asset (at least conceptually; dunno ...
12
Current market depth available at
https://mtgox.com/api/0/data/getDepth.php?Currency=USD
All trades which happened in the last 24 hours available at
https://mtgox.com/code/data/getTrades.php
Retrieves 100 trades that happend after specified transaction
https://mtgox.com/code/data/getTrades.php?since="transaction tid"
A script is required to retrive ...
12
First of all, it is likely a violation of PayPal's Acceptable Use Policy as of Oct 2011:
3(h) involve currency exchanges or check cashing businesses
Given this, it's unlikely that PayPal would be amenable to helping at best, and may close your account (and freeze the funds it had for six months) at worst.
Another chief problem is the high likelihood of ...
12
Shamelessly summarized from this extensive guide on local transactions:
You want to meet in a sufficiently public location, such as a pub or mall, preferably one that has an open wifi.
If you have agreed on terms in beforehand, print out what you agreed upon and take it with you.
If you have not agreed on terms yet, be sure to check the current price of ...
11
The answer is not unique to bitcoin. It would be the same if you're dealing with (non-crypto) foreign currency, stock, a stock derivative or commodity or commodity futures.
When you buy something like the above, you are giving up your "real money" (fiat currency) to take possession of said commodity/stock/bitcoin/etc (let's call these assets in general). ...
9
Put up an ad on LocalBitcoins.com. You possibly might find a tourist arriving with bitcoins who is looking for Argentine pesos. Or perhaps you'll find a local Bitcoin miner who is simply looking to cash out some bitcoins for your pesos.
Are there any goods that you could pay for with your pesos and then have the goods shipped to a buyer who pays using ...
9
If you buy Bitcoins at one price and then sell them for a higher price, you make a profit of the difference between those two prices, less any commission that you paid. However, if the price goes down, you will be in the uncomfortable position of having to either sell them for a loss or hold and hope the price goes back up while risking higher and higher ...
9
Yes, you lose a quantity of your money, at the time you gave it away in exchange for the bitcoin you received. Subsequent changes in the exchange rate only vary the hypothetical value of what you would get if you wanted to trade back.
8
BTC-E currently offers trading pairs of BTC/USD, BTC/RUB, SC/BTC, SC/USD, GG/BTC, TBX/BTC, FBX/BTC, LTC/BTC, LTC/USD, RUC/BTC, RUC/USD, RUC/RUB, NMC/BTC and RUB/USD
8
As with any traded commodity the price largely depends on the confidence of the buyers and sellers in the future evolution of the price. Basically you pay whatever you feel it is worth. Like stocks this changes over time, as the company or the bitcoin economy in our case evolves.
The wild price swings are not that really that surprising then when it is ...
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
Yes, you could reimburse your friend with Bitcoin provided that you can find someone who is willing to sell you bitcoins in exchange for your local currency. However, when the demand for such transactions is strongly one sided in a particular region, the exchange rates may not be particularly favourable.
This question might be of interest for finding ...
7
It is possible, there various sites that provide option (or option like) trading. Each have their pros and cons. Of the ones I know of theses seemed the best. However YMMV and caveat emptor.
At time of writing here are some simple ones:
btc oracle <-- Looks like a very elegant (bitcoin) solution. Just send some bitcoins to the addresses and if (in 15min,...
7
In a limit order, you specify how much of the asset (in this case BTC) you want to buy or sell, and the price you want. If there are matching orders on the book (e.g. someone who wants to sell at the same price, or lower, as the price at which you want to buy), your order will be filled immediately. If not, your order will stay on the book until matching ...
7
Yes, absolutely. Here's just one example of how this can happen:
You invest Bitcoins worth $100 in some kind of high interest scheme.
You cash out of the scheme and get Bitcoins worth $200.
You invest those Bitcoins.
You lose them.
The high interest scheme turns out to be a Ponzi scheme. You are sued to clawback the $100 value of the Bitcoins that were ...
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