Bitcoin Arbitrage Opportunities View
Arbitrage is the practice of taking advantage of a price difference between two or more markets.
These differences occur because of inefficient markets. These inefficiencies can occur as the result of a number of differing forces.
Bitcoins trade against a number of different currencies (e.g., USD, EUR, GBP, PLN) and price moves between those currencies are one reason why these market inefficiencies occur.
Even against the same currency bitcoins will trade at different price levels on markets at different exchanges due to various factors which include: exchange fees, degree of automation, and funding methods (i.e., how easy it is to move funds to and from the exchange).
For whatever reason these price differences exist traders have an opportunity to trade and take advantage of these situations.
The NYSE-GROUP.de, which appears to not have any affiliation with the NYSE (New York Stock Exchange), provides a view of these price differences on their site.
Reading the view
The view shows all amounts in terms of USDs after running the underlying currency through the currency rate converter from Google. The result is an easy-to-follow view of where the best opportunities to perform arbitrage trading do currently exist.
Opportunities where bitcoins can be bought on one exchange and instantly sold for more on another appear in green. Using an example from the image above, a bid of $16.98 USD will buy bitcoins on the Trade Hill USD market (thUSD) yet at the same time a bidder on the Mt. Gox USD market (mtgoxUSD) is willing to pay $17.01. This is a miniature price difference, indicating that at the time the image snapshot was taken the two markets were essentially near equilibrium.
Easier said than done
Though arbitrage opportunities may seem like easy money the main reason traders aren’t executing on these automatically or instantaneously is likely because of the inability to move funds between the various exchanges. Even when there is the ability to do so, the effort to do so is prohibitive.
No Bitcoin exchanges yet have interoperability between them so moving funds from one to another even when possible requires an intermediary that can take days to finalize. Additionally, moving funds usually incurs fees and those may wipe out all but the most lucrative arbitrage opportunities. This interoperability problem was identified as likely the "most visible" pain point for Bitcoin by Rick Falkvinge in his recent series on Bitcoin.
As a result arbitrage opportunities do exist and will usually persist long enough that even traders working with no trade automation can still take advantage of the price differences. We’ll likely be seeing more efficient markets as a result.