Effective Arbitrage in Bitcoin Exchange

Authors: 
Josh Varty and Gleb Nikonov
Case revision date: 
2012-10-22
Length: 
5 Pages (Case Study)
Summary: 

Bitcoins operation block diagram Josh Varty, a co-op student from the University of Waterloo, through the entrepreneurial work term program with the Conrad Business, Entrepreneurship and Technology (CBET) Centre, founded a company with the goal of developing an automated Bitcoin trading agent. He discovered an unexploited niche market in the form of the e-currency Bitcoin by analyzing the economic landscape with the technological versatility of the engineering discipline. Josh intends to develop autonomous trading software to capitalize on his opportunity. However, the discovered market opportunity is underdeveloped, with no prior analytics to provide insight into possible market instability or investment strategy. To gauge the viability of any possible investments and reduce risk, ample investigation of Bitcoin and associated markets is required.

Learning objectives: 

The teaching objectives of this case study are the introduction to cryptocurrency, understanding of some basic economic principles, their impact on real markets and a development of a viability analysis for market opportunities.

Key words: 
Bitcoins; Cryptocurrency; Arbitrage; Economy
CEAB attributes: 
Problem Analysis; A knowledge base for engineering; Creativity; Economics and Project Management
Modules: 
Module 01 - Case Study
Module 02 - Arbitrage Risk Consideration (Restricted to educators only)
Module 03 – Market and Risk Analysis (Restricted to educators only)
Module TN - Teaching Note (Restricted to educators only)

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