RE: BTC hits $1,000 in India. How is this possible?
The simplest answer to this question is that BTC did not hit $1000/btc in india. It hit 68490 INR. But that probably needs some explanation.
When you say BTC costs $1000USD in india, what you are really saying is that some exchange told you that the most recent transaction they did was at an exchange rate of 68.490 INR/USD.
What it isnt telling you is that that it would actually cost much more that 68490 INR for 1000 USD. Because there would be significant transactional costs involved in using INR to buy USD, then getting the USD onto a conventional bitcoin exchange.
You are correct that under normal circumstances, this disequilibrium would be quickly normalized by arbitrageurs. However, in order to complete the arbitrage, they would have to do the following.
- Buy BTC with USD on a USD bitcoin exahcng
- Transfer BTC to an indian exchange
- Sell BTC for INR on an indian exchange.
- Buy USD with INR
- Get the USD on an exchange that accepts USD.
- Goto 1
In this particular case, theyll get bolloxed either by 4 or 5, depending on where they are at, because its quite expensive at the moment to move cash out of india (thats basically why indian business use companies like mine when they want to sell stuff in the USA)
Of course. The point here is - surely it wouldn't cost 35%. For example, I can right now send USDs for INR 71 via PayPal to a US account holder with a click of a button.
Its not just about buying USD with INR. Its about buying USD with INR IN INDIA then getting that USD to someplace where you can get it onto a non indian BTC exchange.
You need two ends to do this, the indian end and the US (or other non indian country) end. At some point, the indian end has to get cash from his titties to the US guys titties.
So yeah, you can USD's for INR. But you can't get the proceeds from selling the bitcoin on the indian exchange into your paypal account. Because theyre going to an indian bank account, and they need to withdrawal to an indian paypal account.
Which can't send international payments, because of regulations. The same regulations stop you with WU, MG and most conventional methods of getting money across borders. You could roll it into a wad, put it in your rectum and try to get it out of the country on a plane, but since they only have small bills right now that would be pretty uncomfortable.
don't call me shirley.
For the typical man on the street, if it was possible at all to get money out (which im not sure it would be for anything but relatively small amounts) that seems about right-ish. I charge between 15 and 45%, depending on the client, the country and the direction money has to move. We don't do a ton of business in india, and all of it is money moving in the wrong direction (and none of my personal clients are there) but its definitely one of the most problematic countries we would be willing to work with.
For someone like me, with access to legions of permissive merchant accounts, no moral compass, and a willingness to get creative with fincen, it might be doable. I actually wasn't aware this arbitrage opportunity existed until i saw your post. Im working on finding a way to make me some cash off of this. At the very least, our indian clients are going to get a rate hike.
So why aren't you taking this chance? Try with small amount first and if the whole cycle is successful, then increase the amount and repeat.
Would be curious to hear the result of this.