Arbitrage with guaranteed profits with Bitcoin-Brokers.

[sayulita]

There have been a couple people PMing asking what banks seem to be the best option to use.

Without a doubt, the best bank is Bank of America. Bitcoin-Brokers sees that bank requested more than any other bank. The next most popular bank seems to be Wells Fargo. Suntrust and Chase seem to be decent as well.

In order of popularity:

1)Bank of America
2)Citibank
3)Wells Fargo
4)Chase
5)Suntrust

[sayulita]

For how long are we holding the BTC in this case?
Msg sent on your website. Will wait for your reply on how to proceed.

replied.

[Rishodi]

I fail to see how this would be profitable. How would you move the funds back to the exchange? BTC-e does not accept wire transfers from US banks, and they're now charging 4% to deposit via OKPay.

I've been doing bitcoin arbitrage for a few months now and in my experience 4% is not enough of a spread to be profitable, even before BTC-e doubled their fee for OKPay deposits. 4% doesn't cover the costs of cycling funds back into the exchange.

[sayulita]

I fail to see how this would be profitable. How would you move the funds back to the exchange? BTC-e does not accept wire transfers from US banks, and they're now charging 4% to deposit via OKPay.

I do not have an account there, but I was under the impression from reading their website, specifically this link:
https://btc-e.com/page/2

that US Wires were accepted.

Who is correct? You or BTC-e?

[Rishodi]

I suspect their FAQ simply hasn't been updated recently. When trying to deposit via bank wire, this is the prompt you'll see (account info redacted):

[sayulita]

I suspect their FAQ simply hasn't been updated recently. When trying to deposit via bank wire, this is the prompt you'll see (account info redacted):

Thanks for pointing that out. What are all the deposit options for US residents at BTC-e?

What is the situation at Bistamp?

Does anybody have an account there who could weigh in with knowledge?

Thanks.

[boomerlu]

A comment on the mechanics of this (in connection with your other thread discussing how you guarantee the price to the seller).

This is how I would structure it...

1) Seller deposits BTC to Bitcoin Brokers.
2) Bitcoin Brokers lists only 80% (20% cushion for market volatility) of those coins for sale. Or maybe it can be an estimated vol.
3) Buyer agrees to pay a fixed FIAT amount (makes it easy for the buyer). They have 24 hours or whatever time frame - this can be fed to estimate volatility and adjust the available coins. In fact, you can make the time frame enterable - the faster you can pay after clicking "buy", the more coins available for sale.
4) Buyer goes and deposits money, takes the pictures of the slip + teller's card.
5) Brokers verifies this information, clicks a button (or something).
6) Button triggers a macro that snaps/timestamps + screenshots Gox prices, and sends it through an API to the seller (or maybe just updates their account, which the seller polls).
7) Seller receives update and immediately executes the offsetting transaction.

There still seems to be a manual step of verifying pictures, unfortunately, which means you'd need enough people to cover 24 hours, or cut the hours.

[sayulita]

A comment on the mechanics of this (in connection with your other thread discussing how you guarantee the price to the seller).

This is how I would structure it...

1) Seller deposits BTC to Bitcoin Brokers.
2) Bitcoin Brokers lists only 80% (20% cushion for market volatility) of those coins for sale. Or maybe it can be an estimated vol.
3) Buyer agrees to pay a fixed FIAT amount (makes it easy for the buyer). They have 24 hours or whatever time frame - this can be fed to estimate volatility and adjust the available coins. In fact, you can make the time frame enterable - the faster you can pay after clicking "buy", the more coins available for sale.
4) Buyer goes and deposits money, takes the pictures of the slip + teller's card.
5) Brokers verifies this information, clicks a button (or something).
6) Button triggers a macro that snaps/timestamps + screenshots Gox prices, and sends it through an API to the seller (or maybe just updates their account, which the seller polls).
7) Seller receives update and immediately executes the offsetting transaction.

There still seems to be a manual step of verifying pictures, unfortunately, which means you'd need enough people to cover 24 hours, or cut the hours.

The way that you described works perfect from where I stand. The verification of the deposit slip is a pain, but it is a necessary pain. It really adds that extra layer of protection for everybody involved.

[arbitrage001]

Your business model doesn't sound.

It will only take 1-2 transactions for all your suppliers to realize there is nothing in it for them.

[sayulita]

Your business model doesn't sound.

It will only take 1-2 transactions for all your suppliers to realize there is nothing in it for them.

Wanna bet?

You need to remember the issue right now which Bitcoin-Brokers is attempting to address is a supply issue, not a price issue.

I wanted to see the bitcoins sourced from the cheapest place possible so I could pass on the savings to the end user, but at the end of the day, I would rather have the bitcoins at a slightly higher price than having no bitcoins at all, which is the exact attitude of most customers. They will understand.

With that being said, I will adjust this offer for members of the bitcoin community.

I will guarantee you 4% on every transaction with Bitcoin-Brokers, if you can supply from any of these three exchanges:

1)MtGox
2)BTC-e
3)Bitstamp

The way pricing has been up until this point at Bitcoin-Brokers has been 2% above MtGox for the buyers.
The new pricing will have to be raised to reflect the extra costs involved to obtain a dependable supply.

Some clients may consider buying elsewhere because of the slightly higher prices. Yet there will be an even higher number of clients lost if they cannot obtain bitcoins at all.

Things will continue as they are for the time being as far as pricing, but once the arbitrageurs begin to work with Bitcoin-Brokers, the prices will rise.

So as I have said before. Bitcoin-Brokers guarantees the suppliers 4%, and now the bitcoins can sourced them from any of the three exchanges.

[Rishodi]

You need to remember the issue right now which Bitcoin-Brokers is attempting to address is a supply issue, not a price issue.

What you're failing to understand is that the two are actually one and the same. You have a lack of supply because the price is too low. Allow the price to fluctuate freely and it would rise, increasing supply and decreasing demand until an economic equilibrium is reached.

Oddly, despite the above misconception, throughout the remainder of your post you seem to recognize the fact that your prices need to rise to attract more suppliers.

[arbitrage001]

The issue has always been:

1) Trust
You are asking seller to trust you with their bitcoin for the deposit requirement. Any seller willing to trust you can offer to sell on their own on this forum for sending bitcoin first.


2) Risk
The 4% mark up doesn't mean the seller is taking 4% profit. There are fee involved in moving money around and commission to the exchange. There are also risk on exchange blowing up and money getting stucked on exchange. There are also risk of money confiscation as it already starting to happen in some European countries.

The deposit requirement required seller to take additional risk of the value of bitcoin. When you add all the risks i mentioned, does the small profit really justify all the risks. No doubt you will find some newbies for the whole scheme, but it isn't going to take them long to realize what they have given up; or event which will make them take losses and then withdraw themselves from the scheme.

[sayulita]

You need to remember the issue right now which Bitcoin-Brokers is attempting to address is a supply issue, not a price issue.

What you're failing to understand is that the two are actually one and the same. You have a lack of supply because the price is too low. Allow the price to fluctuate freely and it would rise, increasing supply and decreasing demand until an economic equilibrium is reached.

The only thing that I am failing to understand is how you think you can tell me what is happening in my own business.

Considering I am the one who speaks with every customer, and oversees the entire business, I find it amusing that you feel you can tell me where the issue is after I have told you otherwise.

This has nothing to do with economic equilibrium. I had made the same mistake that you are making right now. That assumption is that there is ever going to be a balance of buyers and sellers at Bitcoin-Brokers.

Look at it this way:

Imagine you had hopes of setting up an ice cream brokerage business. You had visions of allowing buyers and sellers to come together and create a little ecosystem where buyers and sellers would come together, and buy and sell among each other, and the broker makes  a cut for bringing the transaction into play.

3 weeks into your new ice cream brokerage business, you have a line up down the block with every kid from within the neighborhood waving money at you. They don't care about the price, the don't even care about the flavor of the ice cream...the just want whatever you got a whatever price. That's one side of your proverbial ice cream truck.

Now on the other side of your ice cream truck you have a couple of sellers of ice cream, who don't have anywhere near enough inventory to keep up with your supply. You ask them if there is anything you can do to get more ice cream, and they say "no". They only have a small amount and they are surprised how quickly their ice cream is selling, and if anything they say that they will run out of ice cream soon and not be able to even supply the small amount that they supplied up to this point.

As I have said before, the issue that Bitcoin-Brokers is having, is a supply issue.

[sayulita]

The issue has always been:

1) Trust
You are asking seller to trust you with their bitcoin for the deposit requirement. Any seller willing to trust you can offer to sell on their own on this forum for sending bitcoin first.

This may be the issue with you, but this is not the issue with others. Every single bitcoin which has been sold, has been placed into escrow first. The issue is lack of supply.



[/quote]

2) Risk
The 4% mark up doesn't mean the seller is taking 4% profit. There are fee involved in moving money around and commission to the exchange. There are also risk on exchange blowing up and money getting stucked on exchange. There are also risk of money confiscation as it already starting to happen in some European countries.

The deposit requirement required seller to take additional risk of the value of bitcoin. When you add all the risks i mentioned, does the small profit really justify all the risks. No doubt you will find some newbies for the whole scheme, but it isn't going to take them long to realize what they have given up; or event which will make them take losses and then withdraw themselves from the scheme.

[/quote]

The seller will gross 4% on every transaction. There are fees to accomplish this, but that has never been a secret.

If you bought at MtGox and you were a new trader you pay the maximum 0.6% fee. Then you pay a Wire transfer fee of lets say $50 to cycle your cash from bank back to exchange.

Let's say you are working with $10,000 as a nice round number.

You are going to make $400 from Bitcoin-Brokers before your fees
You will pay approximately $60 in fees to MtGox, and $50 to the bank.

This leaves you with a net of $290 or 2.9%


Depending on each person's financial strength the earning potential can increase. For example, and arbitrageur who had $20,000 to play with would be looking at the following:

You are going to make $800 from Bitcoin-Brokers before your fees
You will pay approximately $120 in fees to MtGox, and $50 to the bank.


This leaves you with a net of $630 or 3.15 %

[sayulita]

Bitcoin-Brokers will also accept bitcoin purchases from CampBX and CAVirtex.

From what I understand CampBX does accept money orders, as well as accepts Dwolla, so this would eliminate the wire transfer costs.

Additionally, Bitcoin-Brokers will accept bitcoins from CAVirtex from Canadians who wish to arbitrage.

CAVirtex allows cash deposits into their accounts which also eliminates the wire transfer fees.

I am trying to make this as easy as I can for anybody interested.

[Rishodi]

The only thing that I am failing to understand is how you think you can tell me what is happening in my own business.

The laws of economics are immutable, no matter what your business is, in the same way that the law of gravitation is the same no matter what country you live in.

That assumption is that there is ever going to be a balance of buyers and sellers at Bitcoin-Brokers.

If there's never going to be a balance, it's because you refuse to raise your prices. Price ceilings which are below the market equilibrium will always, without fail, attract more buyers than sellers. It's an economic fact and it's an unavoidable consequence of holding prices lower than they should be.

For determined individuals, it's entirely possible to wire money internationally and buy up large sums of bitcoins to resell through your service. But doing so comes with risks which cannot be ignored. Unless you can offer high enough profit to justify taking on those risks, I rather doubt you'll be able to attract the supply you want.

I'm speaking not only from an economic perspective, but as an active re-seller of bitcoins. 4% is the bare minimum which I aim to make on any sale, and that's on top of the fees I pay. My average profit is 6-7%, which puts my sell prices at about 8-10% above the spot price on any exchange. And yet I still have a multitude of buyers and probably need to raise my own prices because I ran short on supply just today.

The bottom line is, for 4% it's easy for me to decline your offer. If you were offering at least 6% I could consider it.

Now on the other side of your ice cream truck you have a couple of sellers of ice cream, who don't have anywhere near enough inventory to keep up with your supply. You ask them if there is anything you can do to get more ice cream, and they say "no". They only have a small amount and they are surprised how quickly their ice cream is selling, and if anything they say that they will run out of ice cream soon and not be able to even supply the small amount that they supplied up to this point.

Do you seriously think that, no matter how high the price is, supply will be unaffected? Offer a substantial enough profit margin and I can guarantee that those ice cream suppliers would find ways to get more inventory. The same applies to any product or service.

[marcus_of_augustus]

'm speaking not only from an economic perspective, but as an active re-seller of bitcoins. 4% is the bare minimum which I aim to make on any sale, and that's on top of the fees I pay. My average profit is 6-7%, which puts my sell prices at about 8-10% above the spot price on any exchange. And yet I still have a multitude of buyers and probably need to raise my own prices because I ran short on supply just today.

The bottom line is, for 4% it's easy for me to decline your offer. If you were offering at least 6% I could consider it.

All the hiss and wind and basically you're just angling for a bigger cut of the action ... I bet you make a good haggler in the bazaar?

[sayulita]

The only thing that I am failing to understand is how you think you can tell me what is happening in my own business.

The laws of economics are immutable, no matter what your business is, in the same way that the law of gravitation is the same no matter what country you live in.

That assumption is that there is ever going to be a balance of buyers and sellers at Bitcoin-Brokers.

If there's never going to be a balance, it's because you refuse to raise your prices. Price ceilings which are below the market equilibrium will always, without fail, attract more buyers than sellers. It's an economic fact and it's an unavoidable consequence of holding prices lower than they should be.

For determined individuals, it's entirely possible to wire money internationally and buy up large sums of bitcoins to resell through your service. But doing so comes with risks which cannot be ignored. Unless you can offer high enough profit to justify taking on those risks, I rather doubt you'll be able to attract the supply you want.

I'm speaking not only from an economic perspective, but as an active re-seller of bitcoins. 4% is the bare minimum which I aim to make on any sale, and that's on top of the fees I pay. My average profit is 6-7%, which puts my sell prices at about 8-10% above the spot price on any exchange. And yet I still have a multitude of buyers and probably need to raise my own prices because I ran short on supply just today.

The bottom line is, for 4% it's easy for me to decline your offer. If you were offering at least 6% I could consider it.

Now on the other side of your ice cream truck you have a couple of sellers of ice cream, who don't have anywhere near enough inventory to keep up with your supply. You ask them if there is anything you can do to get more ice cream, and they say "no". They only have a small amount and they are surprised how quickly their ice cream is selling, and if anything they say that they will run out of ice cream soon and not be able to even supply the small amount that they supplied up to this point.

Do you seriously think that, no matter how high the price is, supply will be unaffected? Offer a substantial enough profit margin and I can guarantee that those ice cream suppliers would find ways to get more inventory. The same applies to any product or service.

I admit when I am wrong. In this case, I was wrong. I had my fingers in my ears and was refusing to hear what needed to be heard.

I think it was Winston Churchill who once said

"You can always count on the Americans to do the right thing after they have tried everything else"

I suppose this Canadian acted in the same way with respect to this issue. I am sorry. Thank you for helping me see this situation properly.

July 11th Announcement of a material change in the way that Bitcoin-Brokers operates

Effective immediately www.Bitcoin-Brokers.org is changing the manner in which pricing is determined on the site. The website will be adjusted within the next few hours to reflect the changes, yet I wanted to announce the upcoming change here.

Sellers can now list their bitcoin for sale at whatever prices they want.  Bitcoin will be available at different prices at different banks. When a buyer requests a quote, they will be presented with the available inventory of bitcoin at each bank, along with the price which each seller needs to be paid. Bitcoin-Broker’s fee paid by the buyer is 2%. There are zero fees paid by the seller of bitcoin.

Buyers will then choose which bank and price they prefer.  Bitcoin-Brokers will then forward the necessary deposit instructions to the buyer to complete the transaction. After the buyer has made the cash-only deposit into the seller’s account, the buyer will need to photograph the deposit receipt and upload that receipt to the same support ticket that was used to initiate the transaction as proof of deposit.

The proof of deposit is forwarded to the seller who confirms the deposit has been made into their account via their online banking. The seller then grants Bitcoin-Brokers permission to release the escrowed bitcoin to the buyer and the transaction is complete.

The buyer is always guaranteed to receive bitcoin because each seller needs to place their bitcoin in escrow with Bitcoin-Brokers prior to Bitcoin-Brokers presenting the seller’s bitcoins as available inventory to interested buyers.

FAQ

Q)
The price of bitcoin moves up and down in the open market. At what point through the transaction are  prices determined?

A)This depends on two things which are both up to the seller. Sellers have the choice of working with Bitcoin-Brokers in a couple different ways. If sellers simply have a supply of bitcoin which they want converted to cash deposits, then Bitcoin-Brokers will use the time on the buyer’s deposit slip as a point of reference to establish the pricing of the bitcoin.

If the seller is buying the bitcoin directly from an exchange to pair off the order, then Bitcoin-Brokers will allow the seller to take a screenshot of the paired off purchase. The price which is displayed on the screenshot will be used as the price. This will allow the seller to “lock in” a guaranteed profit. The screenshot will also be forwarded to the buyer as a form of receipt, so the buyer has confidence that the price they paid per bitcoin was in fact the actual price at the time it was purchased out of an exchange.

Q)How long after a deposit has been made, and proof of deposit supplied before bitcoin are released to the buyer’s wallet?

A)Bitcoin-Brokers will release the bitcoin as soon as we are given authorization from the seller to do so. We allow the seller until 8:00 am PST the following day to confirm the deposit and authorize the release of bitcoin. In the event that proof of deposit has been submitted, and the seller becomes unavailable for any reason,  Bitcoin-Brokers will complete the transaction on behalf of the seller with the seller’s escrowed bitcoin. If this happens, the time on the buyer’s deposit slip will represent the time at which pricing of the bitcoin is determined in all cases.

Q)Do quotes ever expire?

A)Yes. After a buyer has been presented with deposit information, Bitcoin-Brokers needs to place a hold on the seller’s escrowed bitcoin to ensure that we only sell what we can deliver. The buyer has until 6:00 pm their local time to make the deposit and upload the deposit receipt as proof of deposit (2 hour extensions may be granted if the buyer needs extra time to make it to the bank). If the deposit has not been made by the cut-off time, the quote expires, the hold is taken off of the bitcoin, and the bitcoin are available for sale again to a new buyer. As a buyer, if you miss the cut-off time, never attempt to deposit with the same deposit information. Ask Bitcoin-Brokers for a new quote.

Q)I am a repeat buyer. Should I open a new ticket for each new purchase? Or should I re-open the same ticket from the previous transaction?

A)Please re-open the same ticket. That way all conversations regarding all your transactions can be found in one place.

Q)I bank at the same bank as the seller. Can I simply perform an account to account transfer?

A)No. The only form of payment which is acceptable is a cash deposit.

Q)Will Bitcoin-Brokers escrow a private bitcoin purchase where the buyer and seller have already found each other and they simply need a trusted source to use as an escrow service?

A)Yes. The fee for this is 1%. Minimum transaction size for these transactions are $1,000. There are no maximum sized transactions.

Q)As a seller, can I ask for my bitcoin back?

A)Yes. Your bitcoin can be returned at any time. There is a 1% fee to return bitcoin.

Q)Are there any minimum transactions values?

A)The minimum transaction amount at Bitcoin-Brokers is $100.

[boomerlu]

Sayulita, consider very carefully how you structure the confirmations / time allowances.

Time delays should be minimized because any delay is market risk for one party.

It is true though that since once the deposit is made, the transaction is so to speak "binding", it's at least not a free option to any party (being short these options is my constant worry with anything like this).

[CurbsideProphet]

So a drug dealer deposits cash into my account, which I then launder by purchasing Bitcoin and kicking it back to him by proxy (you).  When shit hits the fan, where does the paper trail end?  Oh, that's right, my bank account! 

Anonymous cash in, negotiable instrument (wire, ACH, whatever) with all MY info out.  All for a measly 4% or whatever the margin is now.  Ask yourself, why would the OP put it this way:

They don't care about the price, the don't even care about the flavor of the ice cream...the just want whatever you got a whatever price.

They want it at whatever price, they don't care.  Seems legit.  If it sounds to good to be true people...