Arbitrage was born out of the fact that different exchanges show different prices for Bitcoin. Consequently, people started buying on one and then selling on some other exchange that offered a higher price. This helped them make some easy money and gave life to the term “Bitcoin Arbitrage”.
The Simple Maths behind Bitcoin Arbitrage
Bitcoin prices are different on different exchanges. This is due to the fact that various exchanges have divergent users both in terms of the number of users and their preferences for trading. And the price of the Bitcoin depends upon the most recent trade. This makes it go variable among different exchanges, and some fore-sighted people are able to make the most out of it.
Just consider this, right now at the time I am writing this, the price of Bitcoin is USD 5884.70 on Bitstamp, while it is USD 5904.10 on CEX.io. So if you can buy it from the previous one and sell it immediately on CEX then you make a profit of USD 19.4 straightaway. And if you have a considerable amount to invest, you can gain a considerable profit.
But is it as easy as it seems? No. Actually the road is a bit bumpy.
Do you have a large capital figure to invest?
Have you factored in the time an exchange might take to verify a transaction, during when the prices can fluctuate?
Will you be able to handle the verification steps involved with larger transactions, and the time they take in-turn?
Have you found two exchanges that have high volume of buyers and sellers and a considerable difference in the prices too?
You also need to understand that different types of fees are involved in Bitcoin Arbitrage process. These include the Fiat deposit fee, Fiat withdrawal fee, Bitcoin deposit fee, Bitcoin withdrawal fee and Transaction fee. So it is not that easy as it seems to be in the first go. However, if you are a seasoned trader, you can master the tricks of the trade soon. Like one could be: to keep some fiat money always ready, and make the transaction as soon as it is right for arbitrage.
Bitcoin Arbitrage is an easy and quick way to make money if you can master a few tips. But yes, of course you will need to have large amounts to play with. You will also need to be quick with your transactions and decisions about buying and selling. Another important factor is, that you find a great platform to trade. After all that is what matters the most.
For example executium.com has become one of the market leaders recently when it comes to Bitcoin Arbitrage. It is competing tough with podiums like KuCoin, Kraken and Bitstamp because of its extraordinary low fees, high sensitivity to privacy and security and the number of payment methods accepted. Executium.com is quite fast in its validation process, which makes it easier for a trader to speculate the market. The customer support and the query resolving team is also always on its toes. Probably that is what is taking executium.com to the top of the ladder.