Blackbird Bitcoin Arbitrage is a C++ trading system that does automatic long/short arbitrage between Bitcoin exchanges.Bitcoin is still a new and inefficient market.Several Bitcoin exchanges exist around the world and the bid/ask prices they propose can be briefly different from an exchange to another.The purpose of Blackbird is to automatically profit from these temporary price differences while being market-neutral.Here is a real example where an arbitrage opportunity exists between Bitstamp (long) and Bitfinex (short): At the first vertical line, the spread between the exchanges is high so Blackbird buys Bitstamp and short sells Bitfinex.Then, when the spread closes (second vertical line), Blackbird exits the market by selling Bitstamp and buying Bitfinex back.Unlike other Bitcoin arbitrage systems, Blackbird doesn't sell but actually short sells Bitcoin on the short exchange.This feature offers two important advantages: The strategy is always market-neutral: the Bitcoin market's moves (up or down) don't impact the strategy returns.

This removes a huge risk from the strategy.litecoin purposeThe Bitcoin market could suddenly lose twice its value that this won't make any difference in the strategy returns.bitcoin expo new yorkThe strategy doesn't need to transfer funds (USD or BTC) between Bitcoin exchanges.tui bitcoinThe buy/sell and sell/buy trading activities are done in parallel on two different exchanges, independently.litecoin mining money per dayAdvantage: no need to deal with transfer latency issues.dogecoin investmentMore details about short selling and market neutrality can be found on issue #100.precio bitcoin dollar

USE THE SOFTWARE AT YOUR OWN RISK.YOU ARE RESPONSIBLE FOR YOUR OWN MONEY.PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.THE AUTHORS AND ALL AFFILIATES ASSUME NO RESPONSIBILITY FOR YOUR TRADING RESULTS.The trade results are stored in CSV files and the detailed activity is stored in log files.New files are created every time Blackbird is started.It is possible to automatically stop Blackbird after the next trade has closed by creating, at any time, an empty file named stop_after_notrade.Blackbird uses functions written by René Nyffenegger to encode and decode base64.Please make sure that you understand the disclaimer above if you want to test Blackbird with real money, and start with a small amount of money.IMPORTANT: all your BTC accounts must be empty before starting Blackbird.Make sure that you only have USD on your accounts and no BTC.It is never entirely safe to just tell Blackbird to use, say, $25 per exchange.You also need to only have $25 available on each of your trading accounts as well as 0 BTC.

In this case you are sure that even with a bug your maximum loss on an exchange won't be greater than $25 no matter what.Note: on Bitfinex, your money has to be available on the Margin account.If DemoMode=true, all the exchanges are shown in the log file.If DemoMode=false, only the exchanges for which the credentials exist in blackbird.conf are used.For each of your exchange accounts you need to create the API authentication keys.This is usually done in the Settings section of your accounts.Then, you need to add your API keys into the file blackbird.conf.You need at least two exchanges and one of them should allow short selling.Never share this file as it will contain your personal exchange credentials!You need the following libraries: OpenSSL, Jansson, cURL, SQLite3 and sendEmail.Usually this is what you need to install: Download the source from github with: Alternatively, if you already have the existing source tree use: Once you have downloaded the source code, build Blackbird by typing: If all goes well this produces a Blackbird executable in the project directory.

Download and install Docker (with Docker Compose) here.This is what the log file looks like when Blackbird is started:Bitcoin arbitrage is the buying of bitcoins on an exchange where the price is very low and selling it at an exchange where the price is relatively higher.The prices of Bitcoin vary on various exchanges, due to the fact that the markets are not directly linked, and the trading volume, on many exchanges, is low enough that the price does not adjust to the average right away.Here a great video by Andreas Antonopoulos about why these arbitrage opportunities even exist: The price of Bitcoin on Coinbase is $650 and the price of Bitcoin on BTC-E is $636, the difference between the prices is $14, and this is quite a decent opportunity for arbitraging.Lets say, you buy 100 bitcoins on BTC-E at the rate of $636 each and subsequently, you sell them at Coinbase at the rate of $650 each, you make $14 per Bitcoin.Lets get down to the math Number of Bitcoins bought in BTC-E = 100 Price of each Bitcoin                                    = $636 Total price                                                       = $636 * 100 = $63,600 Number of Bitcoins sold in Coinbase      = 100 Price of each Bitcoin                                   = $650 Total                                                                = $650 * 100 = $65,000 Total profit                                                     = $65,000 – $63,600= $1,400 Thus, you can see that Bitcoin arbitrage seems like a wonderful opportunity to make some passive income, but there are a few barriers to it.

So now let’s take the real live example (not a simplified one) and actually include all of the different fees that are involved in such an arbitrage.Those fees include: I’ve taken the liberty to create some sort of calculator using Google spreadsheets just to show you how hard it can be to actually create a profit.Take a look below: If you want to clone this calculator yourself feel free to download it at this link.All of this suggests that Bitcoin arbitrage is quite a difficult task.If you play around with the numbers a bit you’ll see that if the spread (difference between buy and sell values) grows a bit larger you start to become profitable.But in the current state we are actually losing money in the process.However, if you look even further into the calculator’s data you’ll see that BTC-E takes up to 10 days to receive your deposit.In that time the spread can change.So the best tactic would be to keep some fiat currency in the exchange before hand and choose the right time to execute the arbitrage.

If you have some extra BTC, or cash, then you’re welcome to try it yourself.As long as you are careful, and set strict guidelines for when, and how, you will engage in this process.Unlike speculation, margin trading, and other activities that can be viewed as market manipulation, and in some cases, may even be truly harmful to the market as a whole, arbitrage is a positive process.Bitcoins should not cost varying amounts across each exchange, especially consider that all of the exchanges can be accessed from one’s computer.Arbitrage simply brings the exchanges together to an average price.As Bitcoin’s market grows, the gap between exchanges will narrow, as the rate at which people arbitrage increases.The current volume can certainly help an individual make a significant amount of cash, but it is not yet worthwhile for large financial firms to engage in Bitcoin arbitrage directly.Overall, Bitcoin arbitrage may be an opportunity to make some passive income but at the same time, it has risks.

Moreover, almost all exchanges have an API and these can prove to be very prosperous for you.Utilizing these APIs will give you the tools you need to create a custom arbitrage bot, or hire someone to do it for you.Still, even attempting to arbitrage manually can be very beneficial, as long as you watch closely, and make sure you are placing simultaneous trades.My personal opinion is that if you want to make some real profit from arbitraging you have to become an arbitrage professional.You probably won’t be able to arbitrage successful on your first or second try.Like everything else it takes practice, patience and experience.If you’ve had any experience with Bitcoin arbitrage I’d love to hear it in the comment section below.About Latest Posts Latest posts by Ofir Beigel (see all) [Review] Changelly VS ShapeShift– The “Instant” Cryptocurrency exchanges “Bitcoin and Ethereum…both soon obsolete” – James Ricakrds | $2623.69 “Why Bitcoin Can’t Serve As A Currency” – Seeking Alpha | $2345.56