As a curious but uninvolved Bitcoin observer, a question: Why haven't any alternate exchanges popped up? Seems that MtGox is still the go-to place to trade, and I keep hearing about their constantly being behind the 8 Ball when it comes to capacity, etc.
Or are there other exchanges out there and MtGox just gets all the press because they keep breaking :)
"Cold Storage is the act of sending Bitcoins to an offline wallet address. Access to withdraw these funds must be by a human being and with a computer that is never plugged into the internet. This guarantees that a hacker cannot steal the wallet through the internet. This is done with transaction signing and USB keys to transfer the signed transaction from the offline computer to the online Bitcoin network. Over $500,000USD was stolen from the Exchanges Bitcoinica and Bitfloor by hackers because they did not use cold storage. VirtEx uses cold storage on approximately 80% of customer funds.
We keep the remaining 20% in a server ‘hot’ wallet to allow the small daily BTC withdrawal activity to be instant. If the amount of your withdrawal is too large, you will be required to wait for a human to perform a cold storage withdrawal of your funds. We have many different cold storage wallets and use multi-signature authentication so there is never just one person who can access cold storage and large amounts. You can even choose to place 100% of your funds in cold storage with us; however you will not be able to trade the funds unless you withdraw them from cold storage. This feature is coming soon."
It's not an excange, but does anyone know how secure blockchain.info's wallets are? Everything I've read says they're very secure, but I haven't seen any unbiased experts say that...
Is it possible to buy bitcoins on, say Bitstamp @ $85 and then turn around and immediately sell them on Bitfloor @$94? Surely not? What keeps one from doing that? Or does that generally happen until the markets even out?
Note: I don't own any bitcoins (I am averse to risk), just curious and interested and know nothing about ForEx
It is non-trivial to get dollars into accounts on exchanges. It is also not an instant transfer of bitcoins from one exchange to another. your two step process really is a four step one:
0. Get dollars to Bitstamp to buy bitcoins
1. Buy bitcouns from Bitstamp
2. Transfer bitcoins from bitstamp to bitfloor
3. sell bitcoins on bitfloor (assuming the price hasn't changed).
What you are describing is "location arbitrage" (exploiting differing prices for the same goods in different locations). and it is one of the ways that prices get moved back into line.
With a bit of investment you could have some funds in all the exchanges and thus you could buy low on one exchange and sell high on another within milliseconds. Then you just balance the funds in the background to prevent running out of some type of resource on an exchange, but it doesn't have to be instant because you already have all types of funds on all the exchanges anyway.
Well, in order for this to work you'd have to have a BTC position in the exchange that's quoting higher in the first place. You would have to have entered that position at a price that is lower than your planned exit price in order for this to be profitable. You're still just as susceptible to volatility.
You can do it, but most exchanges require 6 confirms which can take around an hour. You'll be betting that the price difference will be just as good in an hour.
It is worth mentioning that since Mt. Gox has the highest confidence in the exchanges market, it consistently trades 10 - 20% higher than other exchanges almost all the time (unless major market movements propagate downwards from Gox, in which case it would be trading lower before everyone else, but that reaction time is measured in minutes or seconds for cost correction across exchanges) so if you want, you can buy more "risky" bitcoins from less popular exchanges, move them into Gox, and sell them in Gox, doing so successfully means you took the "risk" on a less popular exchange and get the difference in moving the money into a more confident market.
Just as an example, bitstamp is trading at $75 while Mt. Gox is at $120 right now. So if I were to buy bitstamp coins, assuming no major market movements rapidly drove Gox down (which would also drive bitstamp down too) you could move BTC from stamp to Gox and pocket a profit of around $45 per coin by taking the risks involved.
Mt. Gox is not at $120- trading has been suspended per TFA. That price was what it was at when trading was suspended, and because of the suspension it has caused the price to crash at other exchanges.
Its important to note that right now the Mt. Gox prices (the default graph) are not representative, because trading there is suspended. This is the link to the bitcoin-24.com market: http://bitcoinity.org/markets/bitcoin24/USD
I'm another uninvolved observer, from what I've seen there are quite a number of other exchanges, many of them fail due to low volumes (and other reasons, some security related).
Whatever their relative strengths or weaknesses, Gox has captured most of the market, and is high enough volume to make it the most liquid and trusted exchange, so it's going to be hard to challenge.
MtGox was the one of (or the) first, but there are plenty of others. As I said in another thread earlier, Bitcoin24 [0] is a good, EUR focused, alternative.
I'm curious how one writes software to link in as an exchange. I haven't read the Bitcoin code throughly, but I'm not sure if I understand how to initiate a transaction with the network. Is there anywhere that documents it well?
Or are there other exchanges out there and MtGox just gets all the press because they keep breaking :)