More and more often in publishers, telegram channels there are various mentions of arbitrage, scrolling cryptocurrencies and big money. This topic is on everyone’s lips, but not everyone knows what it is. Today let’s explain what or who is behind it, how arbitrage works and much more.
How crypto arbitrage came to be
Now, when the world is not stable and there are inexplicable moments in the economies of states, what to say about cryptocurrency. Markets are not stable, so there is some correspondence between exchanges, rates of coins, etc. And as we know, where there is a difference in the price of the same commodity – it is easy to make money. The main thing is to know where you can buy cheaper and sell at a higher price.
But looking for this price difference is quite difficult. For this reason, you can often find various channels that sell this difference. But as a rule, it is designed to attract an audience, nothing more. Arbitrage existed before cryptocurrency, for example, in serious crises, you could earn good money on arbitrage, selling foreign currency much higher than the market value.
But now there is no need for any crisis, because there is a cryptocurrency. It is not afraid of any crisis or sanctions, it does not depend on banks. Transactions are not tracked, you can transfer a huge fortune in one second and no one will know about it.
How to make money on arbitrage
Let’s start by understanding the basic concepts and how they work.
Cryptocurrency arbitrage is several logically connected transactions aimed at profiting from the difference in prices of the same or related assets at the same time on different exchanges or on different markets of the same platform. In simple terms, it is buying an asset on an exchange where the demand (and therefore the price) is lower and selling it where it is higher. The standard strategy of initial entrepreneurship.
P2P – a function that allows you to exchange cryptocurrency. Often used when depositing money into an exchange or withdrawing from an exchange, exchanging fiat for cryptocurrency. Passes from person to person.
The P2P stack is a table of limit bids to buy and sell specific cryptocurrencies. Each order contains the price and number of tokens to buy and sell.
An ad (order) is an application on an exchange or other platform to buy or sell a cryptocurrency. There are several types of orders, but that’s not the point)
There are three types of income from arbitrage.
Intra-exchange arbitrage – reselling or converting cryptocurrencies within the same exchange. One simple way to make money on arbitrage, a lot of ‘infocigans’ offer to buy bundles for exchange, for example RUB-USDT-BTC-USDT-RUB. Thus, by running money through such ‘bundles’ to go in the plus on the price difference.
Intra-exchange arbitrage is possible due to the presence of several markets on the exchange, and due to the fact that there are less affordable ways to buy cryptocurrency. For example, you can fund a crypto exchange in rubles, buy USDT on the spot market, and sell it via P2P at a rate that is usually higher than on the spot.
Inter-exchange arbitrage – earnings from such arbitrage is when you buy cryptocurrencies on one exchange and sell on another. For example, you bought BTC on Kukoin exchange for $19340, transferred it to Binance, where the price of BTC is $19350, and sold it. Your earnings excluding commissions will be 10 dollars. But is it really that simple?
International arbitration is the most complicated type of arbitration, but also the most profitable. It is carried out between exchanges and banks of different countries, the most profitable, because of the current situation in the world.
This is how you can translate Russian rubles into USDT. Exchange these USDT into dollars and back into Russian rubles.
Arbitrage is a good way to make money, but it’s not safe. You need to be well versed in this subject in order to make good money. Frankly speaking, it’s better to spend your efforts and budget and try full-fledged earnings, trading on spot or futures.
Yes, and by engaging in arbitrage you can get in trouble with the tax authorities. Be careful, work only with reliable schemes.