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I wonder these exchanges, e.g. mtgox , bitstamp, bitcoinChina...etc, are they using API to connect to each others?
or they just closed exchange, the price sync are from the free market?
Are bitcoin exchanges all connected to each others? or just close platform
Answers
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Prices are determined by free market forces. The free market prices coins different on each exchange due to liquidity, fees, fiat conversion options, and terms. Prices follow similar patterns over time, but it is traders that determine what the price is.
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Once, there will be a distributed exchange for distributed currency called "Bitcoin".
But now, there is no connection between exchanges, you can check this right here.
See how dramatically differ from each other exchanges, because it is 3rd bitcoin bubble.
- 935.00 Mt. Gox
- 905.82 btc·e
- 840.00 Vircurex
When there is upper trend, you might see difference in 200$-300$ (30%-40% of top latest price).
2I'm pretty sure they are not connected in anyway. The price is synced using supply and demand. Notice that the exchange prices can differ significantly between different exchanges (for example when Mt. Gox had payout problems). – Jori – 2013-11-09T10:19:25.853
Normally arbitration should synchronize those prices. It's possible to make money from price differences, exploiting those moves the price closer together. But it requires working cashflow in/out of the exchange. For example Mt.Gox's higher price could be caused by their broken USD withdrawals. – CodesInChaos – 2013-12-10T16:49:27.113