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Blackbird: Bitcoin arbitrage

(github.com)
298 points vega_empire | 3 comments | 23 Dec 17 12:39 UTC | HN request time: 0s | source
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thisisit ◴[23 Dec 17 15:49 UTC] No.15994579[source]▶
For people wondering, does it work? Short answer. No.

Long answer - The biggest flaw lies in the "advantages" section:

Unlike other Bitcoin arbitrage systems, Blackbird doesn't sell but actually short sells Bitcoin on the short exchange

The problem is only Bitfinex allows short selling. So, the example is an excellent case of cherry picking.

There are other issues with their strategy too.

replies(5): >>15994619 #>>15994834 #>>15995070 #>>15995902 #>>15996124 #
kindfellow92 ◴[23 Dec 17 16:34 UTC] No.15994834[source]▶
You can also short on poloniex
replies(1): >>15995964 #
FabHK ◴[23 Dec 17 20:00 UTC] No.15995964[source]▶
But not BTC/USD, only BTC/USDT, opening another can of worms.
replies(1): >>15996657 #
kindfellow92 ◴[23 Dec 17 22:39 UTC] No.15996657[source]▶
You don’t need to short BTC/USD you just need to be able to short. You can always convert to USD after your arbitrage gains in BTC, which I do and have done.
replies(1): >>15996798 #
FabHK ◴[23 Dec 17 23:04 UTC] No.15996798[source]▶
Suppose on exchange X, BTC/USD trades at 12000, on exchange Y, BTC/USDT at 10000. You sell an expensive BTC on X (for 12000 USD), you buy a cheap BTC on Y (for 10000 USDT).

Now they nicely converge to 20000. You buy back a BTC on X, giving you a loss of 8000 USD. You sell a BTC on Y, giving you a nice 10000 USDT gain.

So, you realised and locked in the projected 2000 USD arb profits - oh, assuming the 10000 USDT you got on Y can actually be exchanged for 10000 USD. You have exposure now to USDT/USD, and your arb profit (in USD) depends on that cross.

replies(1): >>15997520 #
1. kindfellow92 ◴[24 Dec 17 02:20 UTC] No.15997520[source]▶
No, you don’t arb on BTC/USDT. You arb on XXX/BTC and then convert BTC to USD regularly on GDAX.
replies(1): >>15998798 #
2. FabHK ◴[24 Dec 17 09:36 UTC] No.15998798[source]▶
Got it. So we agree, the arb has to be on the same cross (XXX/BTC) on different exchanges.
replies(1): >>16000472 #
3. kindfellow92 ◴[24 Dec 17 17:55 UTC] No.16000472[source]▶
Yup. Bittrex is a good companion