Topic: Basic confusion between exchanges - buying and selling (Read 542 times)

Wow! Thanks for teaching us 'Arbitrage'
I think buying from BITCOIN24 and selling to Mt. GOX won't be a task and would be quite lucrative.

My belief that 'people who know real world finance and economics would fare better than nerds who just mine', is going stronger day by day.

The day isn't far when traditional NASDAQ, Dow Jones etc. investors will take BTC and other alt-currencies seriously and turn everything around.aka wreath havoc :-P

BTW do US or other country TV channels which air stock prices Sensex of Dow, NASAQ etc. show Bitcoin prices as of today?

The reason for the difference in price is because each exchange is a closed system, meaning that the sellers and buyers have moved their funds onto a particular exchange, and not the another. If I'm buying all of my bitcoins on Mt. Gox then I will look for sellers on Mt. Gox because that is where my funds are. I wouldn't even bother looking at CampBX because I don't have the funds there and no way to purchase. So the sellers on each exchange are going to get whatever that market bears.

Hopefully, someday we will see a link opened up between the exchanges so that you can put your funds to buy on one exchange but buy from the overall worldwide pool, even if the BTC exists on a different exchange and vice versa. Doing this would give a lot of strength to Bitcoin as the Mt. Gox - single point of failure, problem would be solved.


This is called arbitrage. Arbitrage is certainly possible but it just isn't as easy as it sounds. In order to do this you must have funds on each exchange you want to arbitrage between. This is because otherwise you will have to move funds, whether old money or BTC between the exchanges. If you're moving BTC from one exchange to the other, that could take as much as 10 minutes for the block to be verified and usable on the exchange. The price could fluctuate before you're able to take advantage of the difference. If you're moving other currencies, i.e. the USD, then it can be rather difficult to quickly (and inexpensively) move funds back and forth.

Thanks both. Really shocking and helpful :-)
I wonder how many people do inter-exchange buy/sells coz Mt. Gox prices peak than every other alternative .. atleast till date I hear.

you stand a better profit from investing in pass throughs...

https://bitcointalksearch.org/topic/btc-tc-tatasicminer-new-micro-share-passthrough-192499  <- this is a newer and I say that because its only been around for about two weeks now but it appears to be legit.

You can indeed move coins from one exchange to another and try to make a profit by using the difference in exchange-rate. However, with transaction fees, withdrawal fees and the risk of rate-fluctuations, the profit you can get from it is fairly small.

All exchanges BitStamp mtGOX BTC-E all show different rates of Bitcoins at any given point of time.
Is it that when you generate a bitcoin address it is assigned/locked to an exchange?

Because if it isn't so then one may buy bitcoins from an exchange and sell it to another which offers a higher price within minutes.

I am confused how does it work??