In spite of its speculative nature, crypto arbitrage has proved to be successful. In the end, it’s a passive way to make some extra money without putting in too much effort – and since the rise of crypto-currencies, this comes as no surprise. Since digital money is not a subject of social influences and no entity has control over it, people started preferring it because of its potential to increase in value over time.
Arbitrage implies purchasing and selling the same asset in order to gain profit from its price imbalance. This means that, when something is sold on a market at a low price and at a high price on another market, people can buy it from the first one and sell it on the second one, gaining profit from the transaction.
People have developed several strategies to reduce the risks as much as possible. For example, let’s take triangular arbitrage. This strategy involves using an automatic trading platform, which allows the person to enter specific criteria that they want to be met before conducting a trade. Once this happens, the computer processes the trade automatically. Arbitrage opportunities can disappear in seconds due to currency changes, so using such a platform is a great benefit, as it can identify an opportunity and perform the trade before it vanishes.
Another way to make profit is if you take into account both crypto-currency and fiat when it comes to exchanges. For instance, you can keep both on two separate crypto-currency exchanges (such as Bitfinex and Bitstamp), and buy digital money from the one with cheaper prices, then sell it on the one with higher prices.
As the popularity of crypto-currency is growing, since it could change world economy forever, it’s worth thinking about investing – after all, nothing is risk-free, but this may be worth the risks.