Topic: Arbitrage with guaranteed profits with Bitcoin-Brokers. - page 3. (Read 12538 times)

The laws of economics are immutable, no matter what your business is, in the same way that the law of gravitation is the same no matter what country you live in.


If there's never going to be a balance, it's because you refuse to raise your prices. Price ceilings which are below the market equilibrium will always, without fail, attract more buyers than sellers. It's an economic fact and it's an unavoidable consequence of holding prices lower than they should be.

For determined individuals, it's entirely possible to wire money internationally and buy up large sums of bitcoins to resell through your service. But doing so comes with risks which cannot be ignored. Unless you can offer high enough profit to justify taking on those risks, I rather doubt you'll be able to attract the supply you want.

I'm speaking not only from an economic perspective, but as an active re-seller of bitcoins. 4% is the bare minimum which I aim to make on any sale, and that's on top of the fees I pay. My average profit is 6-7%, which puts my sell prices at about 8-10% above the spot price on any exchange. And yet I still have a multitude of buyers and probably need to raise my own prices because I ran short on supply just today.

The bottom line is, for 4% it's easy for me to decline your offer. If you were offering at least 6% I could consider it.


Do you seriously think that, no matter how high the price is, supply will be unaffected? Offer a substantial enough profit margin and I can guarantee that those ice cream suppliers would find ways to get more inventory. The same applies to any product or service.

Bitcoin-Brokers will also accept bitcoin purchases from CampBX and CAVirtex.

From what I understand CampBX does accept money orders, as well as accepts Dwolla, so this would eliminate the wire transfer costs.

Additionally, Bitcoin-Brokers will accept bitcoins from CAVirtex from Canadians who wish to arbitrage.

CAVirtex allows cash deposits into their accounts which also eliminates the wire transfer fees.

I am trying to make this as easy as I can for anybody interested.

This may be the issue with you, but this is not the issue with others. Every single bitcoin which has been sold, has been placed into escrow first. The issue is lack of supply.



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2) Risk
The 4% mark up doesn't mean the seller is taking 4% profit. There are fee involved in moving money around and commission to the exchange. There are also risk on exchange blowing up and money getting stucked on exchange. There are also risk of money confiscation as it already starting to happen in some European countries.

The deposit requirement required seller to take additional risk of the value of bitcoin. When you add all the risks i mentioned, does the small profit really justify all the risks. No doubt you will find some newbies for the whole scheme, but it isn't going to take them long to realize what they have given up; or event which will make them take losses and then withdraw themselves from the scheme.

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The seller will gross 4% on every transaction. There are fees to accomplish this, but that has never been a secret.

If you bought at MtGox and you were a new trader you pay the maximum 0.6% fee. Then you pay a Wire transfer fee of lets say $50 to cycle your cash from bank back to exchange.

Let's say you are working with $10,000 as a nice round number.

You are going to make $400 from Bitcoin-Brokers before your fees
You will pay approximately $60 in fees to MtGox, and $50 to the bank.

This leaves you with a net of $290 or 2.9%


Depending on each person's financial strength the earning potential can increase. For example, and arbitrageur who had $20,000 to play with would be looking at the following:

You are going to make $800 from Bitcoin-Brokers before your fees
You will pay approximately $120 in fees to MtGox, and $50 to the bank.


This leaves you with a net of $630 or 3.15 %

The only thing that I am failing to understand is how you think you can tell me what is happening in my own business.

Considering I am the one who speaks with every customer, and oversees the entire business, I find it amusing that you feel you can tell me where the issue is after I have told you otherwise.

This has nothing to do with economic equilibrium. I had made the same mistake that you are making right now. That assumption is that there is ever going to be a balance of buyers and sellers at Bitcoin-Brokers.

Look at it this way:

Imagine you had hopes of setting up an ice cream brokerage business. You had visions of allowing buyers and sellers to come together and create a little ecosystem where buyers and sellers would come together, and buy and sell among each other, and the broker makes  a cut for bringing the transaction into play.

3 weeks into your new ice cream brokerage business, you have a line up down the block with every kid from within the neighborhood waving money at you. They don't care about the price, the don't even care about the flavor of the ice cream...the just want whatever you got a whatever price. That's one side of your proverbial ice cream truck.

Now on the other side of your ice cream truck you have a couple of sellers of ice cream, who don't have anywhere near enough inventory to keep up with your supply. You ask them if there is anything you can do to get more ice cream, and they say "no". They only have a small amount and they are surprised how quickly their ice cream is selling, and if anything they say that they will run out of ice cream soon and not be able to even supply the small amount that they supplied up to this point.

As I have said before, the issue that Bitcoin-Brokers is having, is a supply issue.

The issue has always been:

1) Trust
You are asking seller to trust you with their bitcoin for the deposit requirement. Any seller willing to trust you can offer to sell on their own on this forum for sending bitcoin first.


2) Risk
The 4% mark up doesn't mean the seller is taking 4% profit. There are fee involved in moving money around and commission to the exchange. There are also risk on exchange blowing up and money getting stucked on exchange. There are also risk of money confiscation as it already starting to happen in some European countries.

The deposit requirement required seller to take additional risk of the value of bitcoin. When you add all the risks i mentioned, does the small profit really justify all the risks. No doubt you will find some newbies for the whole scheme, but it isn't going to take them long to realize what they have given up; or event which will make them take losses and then withdraw themselves from the scheme.

What you're failing to understand is that the two are actually one and the same. You have a lack of supply because the price is too low. Allow the price to fluctuate freely and it would rise, increasing supply and decreasing demand until an economic equilibrium is reached.

Oddly, despite the above misconception, throughout the remainder of your post you seem to recognize the fact that your prices need to rise to attract more suppliers.

Wanna bet?

You need to remember the issue right now which Bitcoin-Brokers is attempting to address is a supply issue, not a price issue.

I wanted to see the bitcoins sourced from the cheapest place possible so I could pass on the savings to the end user, but at the end of the day, I would rather have the bitcoins at a slightly higher price than having no bitcoins at all, which is the exact attitude of most customers. They will understand.

With that being said, I will adjust this offer for members of the bitcoin community.

I will guarantee you 4% on every transaction with Bitcoin-Brokers, if you can supply from any of these three exchanges:

1)MtGox
2)BTC-e
3)Bitstamp

The way pricing has been up until this point at Bitcoin-Brokers has been 2% above MtGox for the buyers.
The new pricing will have to be raised to reflect the extra costs involved to obtain a dependable supply.

Some clients may consider buying elsewhere because of the slightly higher prices. Yet there will be an even higher number of clients lost if they cannot obtain bitcoins at all.

Things will continue as they are for the time being as far as pricing, but once the arbitrageurs begin to work with Bitcoin-Brokers, the prices will rise.

So as I have said before. Bitcoin-Brokers guarantees the suppliers 4%, and now the bitcoins can sourced them from any of the three exchanges.

Your business model doesn't sound.

It will only take 1-2 transactions for all your suppliers to realize there is nothing in it for them.

The way that you described works perfect from where I stand. The verification of the deposit slip is a pain, but it is a necessary pain. It really adds that extra layer of protection for everybody involved.

A comment on the mechanics of this (in connection with your other thread discussing how you guarantee the price to the seller).

This is how I would structure it...

1) Seller deposits BTC to Bitcoin Brokers.
2) Bitcoin Brokers lists only 80% (20% cushion for market volatility) of those coins for sale. Or maybe it can be an estimated vol.
3) Buyer agrees to pay a fixed FIAT amount (makes it easy for the buyer). They have 24 hours or whatever time frame - this can be fed to estimate volatility and adjust the available coins. In fact, you can make the time frame enterable - the faster you can pay after clicking "buy", the more coins available for sale.
4) Buyer goes and deposits money, takes the pictures of the slip + teller's card.
5) Brokers verifies this information, clicks a button (or something).
6) Button triggers a macro that snaps/timestamps + screenshots Gox prices, and sends it through an API to the seller (or maybe just updates their account, which the seller polls).
7) Seller receives update and immediately executes the offsetting transaction.

There still seems to be a manual step of verifying pictures, unfortunately, which means you'd need enough people to cover 24 hours, or cut the hours.

Thanks for pointing that out. What are all the deposit options for US residents at BTC-e?

What is the situation at Bistamp?

Does anybody have an account there who could weigh in with knowledge?

Thanks.

I suspect their FAQ simply hasn't been updated recently. When trying to deposit via bank wire, this is the prompt you'll see (account info redacted):

I do not have an account there, but I was under the impression from reading their website, specifically this link:
https://btc-e.com/page/2

that US Wires were accepted.

Who is correct? You or BTC-e?

I fail to see how this would be profitable. How would you move the funds back to the exchange? BTC-e does not accept wire transfers from US banks, and they're now charging 4% to deposit via OKPay.

I've been doing bitcoin arbitrage for a few months now and in my experience 4% is not enough of a spread to be profitable, even before BTC-e doubled their fee for OKPay deposits. 4% doesn't cover the costs of cycling funds back into the exchange.

replied.

There have been a couple people PMing asking what banks seem to be the best option to use.

Without a doubt, the best bank is Bank of America. Bitcoin-Brokers sees that bank requested more than any other bank. The next most popular bank seems to be Wells Fargo. Suntrust and Chase seem to be decent as well.

In order of popularity:

1)Bank of America
2)Citibank
3)Wells Fargo
4)Chase
5)Suntrust

For how long are we holding the BTC in this case?
Msg sent on your website. Will wait for your reply on how to proceed.

Correct.

Bitcoin-Brokers will create an opportunity for the arbitrageur, though each arbitrageur needs money to do this. You cannot use the buyer's money to finance the purchase. You must have your own money already.

Realistically, I wouldn't even bother considering this unless you have at least $5,000. I say this amount because you will need to cycle your cash back into the exchanges to buy the bitcoins.

If you are making 4% on $5,000 you are netting $200. Now you need to wire transfer that money back to the exchange which will probably result in a $50 fee by the time the smoke clears.

Hopefully that makes sense, but feel free to contact me through the helpdesk if you have other questions.

Thanks.

Ok, interested as well. Let me make sure that I am clear.

My main limitation would be in how many BTC I have and how long it takes me to replace the BTC i send to you. I would not be able to buy the BTC to send to you with the cash that is deposited correct?

Replied.