Topic: Why the difference in Bitcoin exchange rates (Read 236 times)

$100 difference is nothing!

Check this out:  http://www.coinparator.com/live/BTC/USD/  You will easily find exchanges with $1000+ difference!!!  Just to put it into perspective.

Nothing stops you from doing this.
It's called arbitrage and a lot of people do it especially if you have enough funds to gain enough from this 1-5% gap.

The problem is timing.
It is possible that by the time your coins hit the exchange somebody who had the same plan dumps a lot and you end up with coins selling cheaper while at the same time because on Kraken coins were under the average price somebody bought and the price is now higher here.

Arbitrage is best done if you have coins and fiat on both exchanges at the same time.
You sell in the same moment 5 BTC on one and buy 5.2 BTC on the other so overall you're in profit with no waiting time.

The price of Bitcoin is a balance between what price someone is willing to trade with to part from the Bitcoin and what someone is ready to pay to acquire it.
 
In a simpler scenario between two people, where I’m trying to buy a house from, say Alex. I’d be looking to buy the house at the cheapest price that I can get and Alex would be looking to sell the house at the highest price that he could get.
Of Course, this transaction cannot happen if both of us stand our ground and refuse to come to an agreement. Say, this transaction is similar to majority of the transactions where I can afford to buy the house for a certain sum and no more than that, and Alex certainly does have a figure in mind below which he wouldn’t be willing to sell his house.
 These are called upper and lower limits of what could be the value of the house in question. Once we have a clear picture of our upper and lower limits for this transaction, we can much easily decide on a price for the house that’s between our upper and lower limits of what we’re pricing the house at.
This is an example of how a transaction takes place between two people that come together to trade a house in exchange for a certain sum of money.

Now, Imagine a scenario with Millions bidding for the same house and then a Billion and then some more.

When we have so many people bidding for a commodity through a platform, the company in question prices the value of the commodity between what one is ready to pay to acquire it and the price at which the person in possession of the commodity is willing to sell it for.
In a transaction involving a house, there normally is a broker that acts accordingly to bring about this balance within which people are willing to trade.

A company acts as a price regulator to bring about a transaction between two people with commodities that they are willing to trade with a common interest to profit by taking a percentage of the transaction usually from the receiver, but in this scenario that involves Bitcoin, the sender usually pays a fee to the third party company.

Thanks OSS. OK ~ whats to stop me transfering from one exchange to the other. Using the above example, I should be able to transfer one BTC from Kraken to CEX, sell it right away, and make 100 euro profit.

It can`t be that easy though. I must be missing something 

The price is based on supply and demand. If for example someone wants to buy bitcoin and he can only find one service where his preferred payment method is accepted then he will be willing to pay an extra amount, you can also take Zimbabwe for example, bitcoin price reached $13k simply because people are no longer trusting on the monetary system, country is running out of cash and the economy is shrinking.

As I type this right now, there seems to be a substantial difference in the BTC exchange rate, on different trading platforms.

For example ~ 1 BTC on Kraken costs 6700 euro. 1 BTC on CEX costs 6801 euro.

Same coin different cost. Why would anyone pay 100 euro more for the same coin.

Regards