Category Archives: Bitcoin Videos

Bitcoin Arbitrage Is No Easy Task

Bitcoin Arbitrage

Bitcoin ArbitrageWith Bitcoin being the leader of digital currencies, growing rapidly, experiencing raids and scandals, and benefiting from an large influx of investor money, the volatility is certainly present that typically offers a great profit potential for arbitrage, which is described by Wikipedia as, “the practice of taking advantage of a price difference between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices.”

In theory, the opportunity for Bitcoin arbitrage seems extremely lucrative. The Bitcoin market is still in its infancy. Bitcoin is very, very, very far from being a mature market. As such, the Bitcoin exchange rate will vary widely from exchange to exchange.

For instance, at the time of this writing, here are the current price quotes for one Bitcoin from three different Bitcoin exchanges:

MtGox:  $266.90

Coinbase: $283.11

BTC-e: $256.49

These types of price variations are a traders dream come true and do not exist in more mature markets. However, Bitcoin being the Wild West type of market that it is, the price variations between exchanges is excessively large.

The opportunity for arbitrage seems too good to be true. One could simply buy 10 Bitcoins on BTC-e for a total of $2,564.90 and then immediately sell them at Coinbase for $2,831.10, for an instant arbitrage  profit of $266.20. Simply do this 4 times per day for a cool grand. Or better yet, what if you used a Bitcoin trading robot to do this many times per hour?

The profit potential would be in the tens of thousands of dollars per day…

So why aren’t savvy traders making millions via Bitcoin arbitrage?

The answer lies in the fact that the exchanges themselves are still very immature. On Wall Street stock exchanges, trades happen in millionths of a second. On Bitcoin exchanges, trades happen in days.

Getting back to the example above of buying 10 Bitcoins at BTC-e and selling them on Coinbase, while that can be done, you will not receive your proceeeds from the sale at Coinbase for several days.

And therein lies the hurdle to successful Bitcoin arbitrage. By the time your funds are received, the Bitcoin price could – and probably will – have moved significantly away from where it was when you initiated the trade.

While some people may see the reward as being worth the risk, with the price of Bitcoin rising so rapidly, magnificent profits can be had by simply buying some Bitcoin and riding the rapid climb in value.

The Price History of Bitcoin

Bitcoin Historical Prices

If you’re aware of the digital currency called Bitcoin, you’re probably also aware that it’s price has been steadily climbing over the past several months as it gains more widespread acceptance from the mainstream financial community.

What you may not be aware of is the remarkable price history that Bitcoin has racked up over the past few years since its launch in 2009.

Official exchange pricing of Bitcoin, depending upon which Bitcoin exchange you’re using, generally began in July of 2010. Bitcoin was first introduced into the world as a functioning digital currency in January of 2009, however, there were no Bitcoin exchanges at the time to convert Bitcoins into any of the government-issued currencies of the world. Any such transactions were done on a person-to-person, individual level. Records of such transactions are sparse.

So, with the records being what they are, we can still estimate the Bitcoin exchange rate for time frames prior to July of 2010.

Which brings us to the historical price of Bitcoin. Here is the Bitcoin price in U.S. Dollars on January 1 of each of the past 4 years (we’ve provided an estimate for the Bitcoin price on 1/1/2010 as there were no official exchange prices dating back that far):

January 1, 2010:  $0.01 (estimate)
January 1, 2011:  $0.29
January 1, 2012:  $4.70
January 1, 2013:  $13.55

Looking at the trend over these past few years of the historical increases in Bitcoin’s value, let’s average out the yearly gains and extrapolate a few years into the future using the already established price history of Bitcoin.

From 1/1/10 to 1/1/11 Bitcoin went up about 29 times in price. From 1/1/11 to 1/1/12 Bitcoin went up about 16 times in price. From 1/1/12 to 1/1/13 Bitcoin went up about 3 times in price.

The average of these three is 16. Using this information, we can project out a few years. Of course, as the old saying goes, past performance is no guarantee of future results. There is no guarantee that Bitcoin’s price will continue to rise at the same phenomenal rate that it has over the previous three years.

With that preface, here’s the projection for the next few years based upon an average yearly price increase of sixteen fold:

January 1, 2014:  $216.80
January 1, 2015:  $3,468.80
January 1, 2016:  $55,500.80
January 1, 2017:  $880,012.80

Bottom line: if Bitcoin’s price for the next 3 years continues to increase at roughly the same rate as the last 3 years, the price of each Bitcoin will be just over $880,000.00.

Those numbers might seem impossible, but consider the story of Kristoffer Koch.

You might want to buy a few Bitcoins at today’s prices, just in case history repeats itself.

 

 

Despite Bitcoin Scandals, The Virtual Currency Blossoms

Bitcoin Scandals Fail to Dampen Bitcoin’s Appeal

Bitcoin ScandalNational Geographic ran a fairly evenhanded story that pointed out that “Bitcoins may change the global economy.” The thrust of the story was that in spite of frequent Bitcoin scandals – the most recent being the shut down and seizure of Silk Road – the Bitcoin currency continues to “blossom.”

The story states, “After the feds seized and shuttered Silk Road, an online marketplace for illegal drugs, earlier this month, some technology experts started sounding the death knell for Bitcoin, Silk Road’s international currency of choice. Instead, we may soon see Bitcoin’s real value.

Invented in 2008, Bitcoin is not the first attempt at an all-digital, cryptographically based currency. Others have existed in one form or another for nearly fifty years, but have either failed to take off or dramatically crashed and burned. Bitcoin is the first cryptocurrency with the deep structure, wide adoption, and trading momentum to achieve escape velocity.

In practice, Bitcoin blends credit cards’ ease of digital transfer with the relative anonymity of a cash handoff. Like all currencies, the problems it poses are both practical and metaphysical; like cash or credit, Bitcoin is somehow both more and less real than the goods it is traded for.

Until now, the most well-known of these goods have been illegal drugs, like those on Silk Road. But the drug marketplace’s shutdown gives Bitcoin a chance to gain some much-needed legitimacy. “It’s a watershed moment for Bitcoin,” Marco Santori, the chairman of the regulatory-affairs committee of the Bitcoin Foundation, told The New Yorker. “Bitcoin’s PR problem, with which it has struggled for the last year or so, is being addressed in a very direct way.”

Bitcoin’s future potential was a hot topic this week at emTech, an MIT conference on emerging technologies. In a panel hosted by MIT Technology Review’s Tom Simonite, MIT economist David Johnson and BitPay CEO Stephen Pair discussed Bitcoin’s complex relationship with paper currencies, credit, and state authority.”

 

 

Bitcoin Raids Fail To Dampen Bitcoin Demand

Bitcoin Demand Continues to Grow In Spite of Bitcoin Raids

Bitcoin RaidThroughout 2013 there have been frequent raids on businesses that are aligned with Bitcoin. In spite of the onslaught of bad publicity, Bitcoin continues to gain favor – and demand – from the public at large.

The Washington Post featured a story recently that reports on the counter intuitive results these raids have had:

“In the first four months of 2013, Bitcoin saw a massive rally, rising from $13 at the start of the year to $266 on April 10. The price then crashed to $50 later in April, rose to $170, and fell below $65 in July.

But in the last three months, the price of Bitcoins has risen steadily. It hit $140 earlier today.

The currency’s value has risen despite a spate of negative headlines. Earlier this month the feds arrested the alleged mastermind of the Bitcoin-based narcotics marketplace Silk Road. In July, federal regulators shuttered an alleged Bitcoin Ponzi scheme. And the leading Bitcoin-based exchange, the Japan-based Mt. Gox, has had a series of problems, including a U.S. government crackdown and an acrimonious legal dispute with a former business partner.

But at the same time, entrepreneurs have been quietly building new businesses on top of the virtual currency. Few if any of those businesses have produced big profits yet. But the fact that so many entrepreneurs and investors are pouring resources into the system — despite its highly publicized problems — suggests a high degree of confidence that those problems will be worked out in the long run, and Bitcoin will become an important part of the world economy.”

 

 

Bitcoin – The Groundbreaking Digital Currency

The World’s Foremost Virtual Currency

Bitcoin is the world’s first and foremost purely digital currency. Bitcoin.org describes it this way:

“Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of bitcoins is carried out collectively by the network. Bitcoin is open-source; its design is public, nobody owns or controls Bitcoin and everyone can take part. Through many of its unique properties, Bitcoin allows exciting uses that could not be covered by any previous payment system.”

Althought the video below is a couple months old, it makes the point that savvy professional investors are getting involved in the Bitcoin reformation.

 

 

Here’s a little bit of info from the video description: “The prospects for the alternative cyber-currency known as Bitcoin have brightened, with some serious financial players preparing to open it to investment. The Winklevoss twins, best known for suing Facebook’s founder Mark Zuckerburg over claims he stole their social network idea, are planning to float a Bitcoin trust. But even though the multi-millioniares are now going along with Bitcoin, the rebel currency still has a strong grasp over those drawn to its anti-establishment charm – as RT’s Marina Portnaya reports.”

Ready to get started? The first step is to create a Bitcoin wallet. Or, if you are a more sophisticated Bitcoin proponent, you might consider an automated Bitcoin trading robot.

Bitcoin Investors Pouring Capital into Bitcoin Startups

Bitcoin investors are aiming to cash in on the explosive growth in the value of Bitcoin. Even the revered Wall Street Journal is reporting on the phenomenon:

 

 

About the topic of the video: “Bitcoin startups are beginning to raise sizable investment capital even as industry leaders warn that hackers are abusing the Internet virtual currency for profit.”

However, it’s not just venture capital firms that can cash in as Bitcoin investors. Even the average earner can create a Bitcoin account, buy some Bitcoin, and experience the rapid appreciation in the value of Bitcoin.

Bitcoin Future Value to Reach $1 Million?

Will Bitcoin’s Value Ever Reach $1 Million?

The media is abuzz with the story of how a man bought $26.60 worth of Bitcoin, forgot about the purchase until recently, and has now remembered making the paltry investment only to discover that the puny purchase has turned into a significant windfall.

The 5,000 Bitcoin that he purchased 4 years ago for less than $30 has turned into $886,000 at today’s value.

It’s no secret that the value of Bitcoin has soared since its creation several years ago.

With the current value of Bitcoin in the $200 range, the question is whether Bitcoin’s appreciation has reached its peak, or if there’s more increase in value to come.

Max Keiser, a London-based financial broadcaster and former stock broker from Paine Webber, discusses the future value of Bitcoin and makes the bold prediction that the price per Bitcoin could reach $1 million each in the not-too-distant future.

Here’s his commentary:

 

 

 

Bitcoin Sniper Trading Robot

Automated BTC Trading With Bitcoin Sniper

Bitcoin SniperBitcoin Sniper is software program designed specifically for automated trading of Bitcoins on a Bitcoin exchange. The developers and promoters of this software claim that “no experience is needed” to start trading.

While that may be true, amateur/beginner traders should not expect to earn “$9,280 Dollars today trading Bitcoin”.

Please note that the claims of earnings are headlined in bold print, while the disclosure if buried at the bottom of the page in fine print. Before buying this software, please consider these facts from the official sales page:

“HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program.”

 

 

Bitcoin Robot for Automated BTC Trading

Automated BTC Trading Using Bitcoin Robot

Bitcoin RobotBitcoin Robot is a software program designed specifically for trading Bitcoins on a Bitcoin exchange. The software creators claim that it:

- Tracks and records chart patterns in Bitcoin trading

- Looks for indicators of market breakouts

- Determines market depth

- Anticipates ideal times to buy or sell based upon technical indicators and market trends.

- Is designed and programmed to maximize profit and minimize losses.

- Can be run  24 hours per day, 7 days per week

Here is a video with additional information on Bitcoin Robot:

 

 

Before you can start automatically trading BTC using Bitcoin Robot or any other automated trading program, you’ll need to create a wallet which will include your unique Bitcoin address.

What is a Bitcoin Address?

Understanding your Bitcoin Address

bitcoin addressTo get a Bitcoin address so that you can send and receive Bitcoins, you’ll first need to create a Bitcoin Wallet. When you create your wallet, a unique identifier will be assigned to that wallet, and that will be your personal Bitcoin address. It will be unique to the wallet that you create, and no other Bitcoin wallet will ever have that address.

The Bitcoin network explains it this way:

“Behind the scenes, the Bitcoin network is sharing a public ledger called the “block chain”. This ledger contains every transaction ever processed, allowing a user’s computer to verify the validity of each transaction. The authenticity of each transaction is protected by digital signatures corresponding to the sending addresses, allowing all users to have full control over sending bitcoins from their own Bitcoin addresses.”

If you would like to see how to sign into your wallet and find your Bitcoin address, the following short video will walk you through the steps: