
Why don't people buy Bitcoin at one exchange and sell at another? - DanielRibeiro
http://bitcoin.stackexchange.com/questions/12670/why-dont-people-buy-at-one-exchange-and-sell-at-another
======
drakaal
The lag is too high. Rarely can you buy coins, get them transferred in to your
wallet, transfer them in to the new exchange and sell them before the price
has changed.

One of the biggest problems with Bit Coin is the delay. 5 minutes to move
money between wallets is not uncommon. If you want to pay me, so I can pay the
waitress we need 10 minutes.

Doing a check out at the grocery store that takes 5 minutes is not going to go
over well with the masses.

Figuring out how to make the markets more fluid will likely be the biggest
challenge for BTC, after is solves its issues with having huge swings in price
such that everything in the grocery store would have to be retagged every hour
to make pricing work. :-)

~~~
Aqueous
All you have to do is keep some money in USD and BitCoin in reserve on all the
exchanges. That way you can buy some BitCoin on one exchange and then sell the
same amount on the other at the same time, and then transfer over at your
convenience.

~~~
wmf
The imbalance is not random; MtGox always has a higher price so your money
would be flowing in one direction and you'd end up with all your money in
MtGox USD that's very difficult to access.

~~~
Aqueous
It goes in both directions. If you are running low on USD at BitStamp, you
just deposit money there (assuming deposits take an acceptable amount of time)
and withdraw the same amount from Mt. Gox (which might take a while). You
still made money. Are you looking for a never-ending money cycle?

You are creating a cyclical process of arbitrage. If arbitrage traders have
large enough reserves they should be able to pretty consistently close the
gaps, which means your opportunities will be few and far between anyway,
giving you plenty of time to prepare.

When buying and selling BitCoin becomes more fluid, that is.

~~~
wmf
There's no cycle if you can't withdraw USD from MtGox at all.

~~~
Aqueous
Well MtGox clearly has a problem with USD withdrawals, which is why this
arbitrage opportunity exists in the first place and doesn't seem to be
closing.

If they fix the USD withdrawal problem, which I suspect they will do as they
start to lose business to the other, better exchanges, expect arbitrage to
obliterate the price difference between MtGox and other exchanges.

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randartie
It's not possible today because the infrastructure just isn't there. You'll
experience trading lag which is just too risky and it offsets the profits.
Also, getting money off an exchange takes forever.

Someone organized a fund on bitcointalk which tried to arbitrage prices on
mt.gox and bt-china (This is cumbersome because you need physical presence in
china to be part of bt-china). It sounded promising but it failed and everyone
had to be refunded.

[https://bitcointalk.org/index.php?topic=330209.0](https://bitcointalk.org/index.php?topic=330209.0)

In fact, the reason the BTC price on Mt.Gox is so high is because you can't
get your money off there in a reasonable amount of time. This means that to
get your money off of Mt.Gox you do not send a sell order to convert to USD,
you instead transfer the BTC to an external wallet and sell it elsewhere. This
leads to more buy orders than sell orders on Mt.gox (leading to higher BTC/USD
prices).

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iLoch
The topic of arbitrage comes up quite frequently in Bitcoin discussions; it's
a good question and the answer is fairly straight forward. There aren't many
choices for exchanges with a reasonable amount of transaction volume. Most
people flock to these exchanges because they're well known, trusted, and you
can trade large volume. The problem with these exchanges is their popularity -
everyone using them means longer waits for transactions to be processed. In
order to perform arbitrage effectively you need to be able to trade quickly.
Any semi sane person will realize the risk in trading with 5 minutes lag,
nevermind two weeks. The gain isn't worth the risk.

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aosmith
Let's just be crystal clear about this, people are doing it. The prices would
be vastly different if they were not. This route could be direct or indirect,
but it's happening none the less. At this point you won't get any money out of
Mt. Gox unless you have a JP bank account, which requires physical presence
there.

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damian2000
One reason not mentioned here is that its probably more attractive right now
(with the upward price movement) to just buy and hold Bitcoin rather than take
the arbitrage and cash out on another exchange.

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fat0wl
so the currency with "no transaction fees" avoids the free-market implications
of arbitrage that would prevent price-fixing..... through the serendipity of
two-way transaction fees?

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nl
More interestingly: Is anyone doing BTX<->Litecoin arbitrage?

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nutate
Well 404 people starred this github repo that does it...
[https://github.com/maxme/bitcoin-arbitrage](https://github.com/maxme/bitcoin-
arbitrage) I added campbx support to a pull I did and tried it out a while
back. It was kinda cool. So yeah, you can do it. The problem is, unless you
have limitless liquid $$$ at both exchanges you're probably going to hit
bottom on one of them sooner or later. At that point you're talking time and
fees before you can get more cash in.

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downandout
You can easily buy at BTC-E and sell at Coinbase for a profit. The spread
between the two is routinely high enough to limit the price fluctuation risk
to acceptable levels these days.

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foo298423842
I'm certain people do. It's called arbitrage.

