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December 04, 2013, 11:44:25 PM |
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It is very difficult to transfer dollars/euros/yen/... between exchanges so the prices tend to drift apart.
For example, the price is high on Mt. Gox and low on BTC-e. A smart person would sell bitcoins on Mt. Gox and then use that money to buy them back on BTC-e. This is called arbitrage, and the price difference tends to be very low if enough people do it.
The problem is that takes a long time to transfer dollars from Mt. Gox to BTC-e. The price could change during that time and the person doing the arbitrage could lose money. Because arbitrage doesn't work well, the prices tend drift apart depending on other factors.
For the specific cases of Mt. Gox and BTC-e: it is hard to get dollars out of Mt. Gox, so the exchange rate is high. It is hard to get dollars into BTC-e, so the exchange rate it low.
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