Can you explain to me how you can use litecoins to speed up the arbitrage trade I discussed bearing in mind that all the historical evidence suggests LTC/BTC rates will be almost the same across all exchanges.
My thought is that having LTC listed on Mt. Gox will drive down the gap in USD prices, since historically the gap in prices between exchanges where both BTC and an alt are listed has been smaller than the gap between Mt. Gox and said exchanges. (This could be because of volume, or any one of another ten million reasons, though; obviously it's just a guess.)
Do you retarded litecoin supporters think adding feathercoin to mtgox would help eliminate arb opportunities too? How about ixcoin? Adding litecoin would only help arbitrage if the litecoin market cap was LARGER THAN BITCOIN. Adding a tiny market to an exchange does nothing to smooth rates out because so little money can be funneled through the link before it creates another differential and arbitrage opportunity there. Adding USD as an option, however, MASSIVELY helps smooth out arbitrage opportunites because USD market cap is way bigger than bitcoin so nothing happens to the USD market when you send 100k USD from japan to bitstamp for an arb. The arb opportunities only exist because of the fees and wait time associated with sending USD wires.
This is an interesting point, but it's only valid if the volume on Mt. Gox is larger than LTC's market cap, which it is not (it's < 20%). Since most people involved in LTC right now are presumably speculators, it stands to reason that LTC has enough room to absorb the arbitrage, which will be significantly less than even Mt. Gox' daily volume.
