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Does this represent an arbitrage opportunity? (it appears not, since MtGox is limiting transactions due to a bug in their implementation of the protocol.) Also,

Does this represent an arbitrage opportunity? (it appears not, since MtGox is limiting transactions due to a bug in their implementation of the protocol.) Also, I wonder if anyone has used bots to perform HFT using bitcoin in the same manner that was used on traditional stock exchanges.

camus2 13y ago
No because you can buy bitcoins but cant get them out of MtGox. At that point,it's just gambling.
- MartinCron 13y ago
  If you're confident that MtGox will eventually get their shit together and that bitcoin will have at least that value when you can, then it's a gamble worth taking. It's not a gamble that I'm taking, but I understand the motivation of those who would.
  - iamjustin 13y ago
    Greed is a powerful motivator, but I'm with you. If MtGox hasn't gotten their shit together in the year since they started having problems, I don't see why they would now.
- rasz_pl 13y ago
  There is an exchange that trades real fake money and mtgox fake money.
- dscrd 13y ago
  I would claim that all sorts of money-making schemes that involve bitcoins are more or less still gambling.
minimax 13y ago
Also, I wonder if anyone has used bots to perform HFT using bitcoin in the same manner that was used on traditional stock exchanges. There are certainly people out there with trading bots hooked up to the various exchanges. I know at least one guy who was trying something a few years ago. Because the volume is so low (~ few $M daily) I don't think there are any big players there. Also the market data and order entry protocols don't look like they would be suitable for the really high speed stuff. That said, the market data and order entry protocols are really simple and I think most exchanges offer them for free. An automated bitcoin/dollar trading program would be a pretty easy thing to whip up. It would probably be a good introduction to automated trading for people that are interested in that sort of thing.
- dclusin 13y ago
  I would also add that a lot of venue arbitrage strategies are too cumbersome to implement in bitcoin because you need to store collateral with multiple exchanges unlike equities or other proper financial markets.
- drpancake 13y ago
  I'll just jump in here and cheekily plug my service: http://tradewave.net http://tradewave.net There are a lot of people building trading bots for cryptocurrencies, and it's pretty easy to get started by yourself. But not everyone has the chops or patience to do it well; for example gathering, aggregating and storing data across the various exchanges is a huge pain. So my site abstracts away that stuff. You can't do real HFT with Bitcoin (and others) as the infrastructure just isn't there yet. The lowest I've heard is 15-30 second trades and even that's rare. Most people go for 1-2 hours.
deleted 13y ago
[deleted]
VLM 13y ago
The protocol component in BTC to firm confirm a trade is not at this time entirely amenable to buying and selling one million times per second or whatever. Maybe one transaction per minute? Also there's no arbitrage opportunity where buying nine shares of a NYSE stock at 2.01 and one share at 2.00 means the "real" price is 2.009 but the NYSE stubbornly won't trade in fractional pennies (made up example numbers). The BTC transaction would just be one simple 2.009 transaction not some foolishness involving ten thousand trades or whatever. You could have a BTC derivative market with somebody acting as the market maker just like NYSE, although thats kinda at cross purposes to the whole idea of a distributed currency. There is no market maker so picking winners or losers by deciding who gets to front run vs who doesn't, is also kind of meaningless. Or the TLDR short version is no it isn't gonna happen due to some inherent design issues. There are some interesting issues. There's no particular technological reason GOOG couldn't say F the stock exchanges and issue a derived cryptocurrency and let people arbitrage between their new stock equivalent and the rest of the world. Well, there are a couple legal and accounting issues, but like I wrote, no technical issue. Would not be totally surprised to see a BTC-like infrastructure replace existing monolithic market maker trading structures. Probably the same crooks owning the whole works, I'm talking about it as a deployed technology not a social phenomena or whatever. Much as running TCP/IP in 2014 doesn't mean anymore that you're part of DARPA.
- maxerickson 13y ago
  MtGox is essentially doing what you are talking about, allowing people to trade bitcoin derivitives (that they supposedly back 1:1 with real bitcoins). Trades on MtGox don't hit the blockchain.
  - VLM 13y ago
    Yes, exactly, and as I wrote "although thats kinda at cross purposes to the whole idea of a distributed currency." A great plan if you want to buy coins for $632.58 and end up getting $260 for them because of a centralized system failure in an inherently decentralized protocol. There's an old saying about idiots, idiot proofing, and long term trends in idiot breeding under idiot proofing environmental conditions. So invent a decentralized massively redundant system, someone WILL find a way to centralize it, and SPOF it, yet still blame the designer when it blows up. Like a law of human psychological nature.
Nicholas_C 13y ago
>Also, I wonder if anyone has used bots to perform HFT using bitcoin in the same manner that was used on traditional stock exchanges. Kind of: https://github.com/maxme/bitcoin-arbitrage https://github.com/maxme/bitcoin-arbitrage I'm not a Bitcoin expert but I believe the problem is that moving money between exchanges takes quite some time and that reduces the volume that can be traded.
nfriedly 13y ago
I'm working on one that does low-frequency trading - it did it's first automated trade this afternoon! https://github.com/nfriedly/coin-allocator/ https://github.com/nfriedly/coin-allocator/ (Although mine is running in the cryptsy exchange, not gox)

camus2 13y ago

No because you can buy bitcoins but cant get them out of MtGox. At that point,it's just gambling.

MartinCron 13y ago
If you're confident that MtGox will eventually get their shit together and that bitcoin will have at least that value when you can, then it's a gamble worth taking. It's not a gamble that I'm taking, but I understand the motivation of those who would.
- iamjustin 13y ago
  Greed is a powerful motivator, but I'm with you. If MtGox hasn't gotten their shit together in the year since they started having problems, I don't see why they would now.
rasz_pl 13y ago
There is an exchange that trades real fake money and mtgox fake money.
dscrd 13y ago
I would claim that all sorts of money-making schemes that involve bitcoins are more or less still gambling.

minimax 13y ago

Also, I wonder if anyone has used bots to perform HFT using bitcoin in the same manner that was used on traditional stock exchanges. There are certainly people out there with trading bots hooked up to the various exchanges. I know at least one guy who was trying something a few years ago. Because the volume is so low (~ few $M daily) I don't think there are any big players there. Also the market data and order entry protocols don't look like they would be suitable for the really high speed stuff. That said, the market data and order entry protocols are really simple and I think most exchanges offer them for free. An automated bitcoin/dollar trading program would be a pretty easy thing to whip up. It would probably be a good introduction to automated trading for people that are interested in that sort of thing.

dclusin 13y ago
I would also add that a lot of venue arbitrage strategies are too cumbersome to implement in bitcoin because you need to store collateral with multiple exchanges unlike equities or other proper financial markets.
drpancake 13y ago
I'll just jump in here and cheekily plug my service: http://tradewave.net http://tradewave.net There are a lot of people building trading bots for cryptocurrencies, and it's pretty easy to get started by yourself. But not everyone has the chops or patience to do it well; for example gathering, aggregating and storing data across the various exchanges is a huge pain. So my site abstracts away that stuff. You can't do real HFT with Bitcoin (and others) as the infrastructure just isn't there yet. The lowest I've heard is 15-30 second trades and even that's rare. Most people go for 1-2 hours.

deleted 13y ago

[deleted]

VLM 13y ago

The protocol component in BTC to firm confirm a trade is not at this time entirely amenable to buying and selling one million times per second or whatever. Maybe one transaction per minute? Also there's no arbitrage opportunity where buying nine shares of a NYSE stock at 2.01 and one share at 2.00 means the "real" price is 2.009 but the NYSE stubbornly won't trade in fractional pennies (made up example numbers). The BTC transaction would just be one simple 2.009 transaction not some foolishness involving ten thousand trades or whatever. You could have a BTC derivative market with somebody acting as the market maker just like NYSE, although thats kinda at cross purposes to the whole idea of a distributed currency. There is no market maker so picking winners or losers by deciding who gets to front run vs who doesn't, is also kind of meaningless. Or the TLDR short version is no it isn't gonna happen due to some inherent design issues. There are some interesting issues. There's no particular technological reason GOOG couldn't say F the stock exchanges and issue a derived cryptocurrency and let people arbitrage between their new stock equivalent and the rest of the world. Well, there are a couple legal and accounting issues, but like I wrote, no technical issue. Would not be totally surprised to see a BTC-like infrastructure replace existing monolithic market maker trading structures. Probably the same crooks owning the whole works, I'm talking about it as a deployed technology not a social phenomena or whatever. Much as running TCP/IP in 2014 doesn't mean anymore that you're part of DARPA.

maxerickson 13y ago
MtGox is essentially doing what you are talking about, allowing people to trade bitcoin derivitives (that they supposedly back 1:1 with real bitcoins). Trades on MtGox don't hit the blockchain.
- VLM 13y ago
  Yes, exactly, and as I wrote "although thats kinda at cross purposes to the whole idea of a distributed currency." A great plan if you want to buy coins for $632.58 and end up getting $260 for them because of a centralized system failure in an inherently decentralized protocol. There's an old saying about idiots, idiot proofing, and long term trends in idiot breeding under idiot proofing environmental conditions. So invent a decentralized massively redundant system, someone WILL find a way to centralize it, and SPOF it, yet still blame the designer when it blows up. Like a law of human psychological nature.

Nicholas_C 13y ago

>Also, I wonder if anyone has used bots to perform HFT using bitcoin in the same manner that was used on traditional stock exchanges. Kind of: https://github.com/maxme/bitcoin-arbitrage https://github.com/maxme/bitcoin-arbitrage I'm not a Bitcoin expert but I believe the problem is that moving money between exchanges takes quite some time and that reduces the volume that can be traded.

nfriedly 13y ago

I'm working on one that does low-frequency trading - it did it's first automated trade this afternoon! https://github.com/nfriedly/coin-allocator/ https://github.com/nfriedly/coin-allocator/ (Although mine is running in the cryptsy exchange, not gox)