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Comment by vgrocha | Hacker News Reader

People beware, this is nonsense:

* if there was a profit to be made for free, why wouldn't they invest their own money and take the profit themselves?

* as soon as enough people are arbitraging, the market prices will tend to the same equilibrium price. Buying in the cheapest place will push the price up and selling in the most expensive, down.. until equilibrium (same price)! There will be no profit to be made, but to the ones providing the arbitrage service

*also you need to take into account friction costs (fees) of moving your capital (non-bitcoin) from exchange to exchange. Those cost must be taken into account of the arbitraging price.

bottom line: not worth it

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Hey vgrocha, we're realists and sceptics ourselves, so we appreciate the feedback and we'll try to answer your concerns.

1.) The reason for this is very simple. You need bitcoins to make arbitrage happen. Bitcoin fluctuates so much that it carries a large currency risk. This is why none of us has more than a few bitcoins on their accounts - we're not wealthy or reckless people. In order to exploit arbitrage opportunities ourselves, we'd have to buy large quantities of bitcoins to arbitrage them and make profit. Some people on the other hand already have large amounts of bitcoins and don't have much to do with them except watch the price fluctuate. We offer them a better use of it ;)

2. Profit is not made for free - there are risks involved. One simple risk is that one of the bitcoin markets we trade on goes bust. We list all risks on our website.

3.) This is true - there are plenty of people arbitraging the market which is why price differences among markets are already minimal. However when you have a large enough volume of users you get lower fees. It also depends on how good the algorithm you use is. You can check arbitrage opportunities currently out there right here: http://www.cryptocoincharts.info/arbitrage

4.) Yes, we of course do that. Our profits are calculated by subtracting all the fees associated with trading.

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