Do you retarded litecoin supporters think adding feathercoin to mtgox would help eliminate arb opportunities too? How about ixcoin? Adding litecoin would only help arbitrage if the litecoin market cap was LARGER THAN BITCOIN. Adding a tiny market to an exchange does nothing to smooth rates out because so little money can be funneled through the link before it creates another differential and arbitrage opportunity there. Adding USD as an option, however, MASSIVELY helps smooth out arbitrage opportunites because USD market cap is way bigger than bitcoin so nothing happens to the USD market when you send 100k USD from japan to bitstamp for an arb. The arb opportunities only exist because of the fees and wait time associated with sending USD wires.
This is an interesting point, but it's only valid if the volume on Mt. Gox is larger than LTC's market cap, which it is not (it's < 20%). Since most people involved in LTC right now are presumably speculators, it stands to reason that LTC has enough room to absorb the arbitrage, which will be significantly less than even Mt. Gox' daily volume.
Comparing TRADING VOLUME to MARKET CAP is irrelevant. We are talking about arbs. Comparing MARKET DEPTH between mtgox and litecoin would be relevant. The arbs currently exist between BTC/USD on mtgox and BTC/USD on bitstamp. Adding tiny markets for LTC/USD or LTC/BTC will not help, and neither would it help to add IXC/BTC. The second anyone moves a decent amount of money through the alt-pairs to take advantage of the arb, a LARGER arb will be created in the alt-pair than exists for BTC/USD. This is because the alt-pairs have no market depth. If several exchanges added GBP/USD, that could help with arbs since GBP is a huge market and UK bank transfers take <2hr. I can't believe this thread hasn't gotten moved. How is a thread where people argue "Adding (currency with tiny market cap) means more efficient arbs" allowed to pollute the main bitcointalk forum?