Bitcoin arbitration? Cryptocurrencies have become a great source of income for many people nowadays. With the proper knowledge about technology, it is possible to systematically make enough income in order to build a heritage. Among what can be done, Bitcoin arbitrage has emerged as a very profitable and well-liquidated option.
If you already have the funds in hand and just need to learn more about it, enjoy the following content.
In this article you will see:
- What is arbitration?
- What is Bitcoin Arbitrage?
- Is bitcoin arbitration worth it?
- How does the automation work?
- What are the advantages of the automation?
- Why rely on a specialized exchange?
- How to choose the ideal exchange?
WHAT IS ARBITRATION?
To understand how this happens with virtual currency, we will discuss the concept in a more general way. Financial market arbitrage consists of profiting from trading the same asset in different markets, buying from one location for a lower price and selling where it is worth more. With this, the negotiator gets the difference and manages to increase their profit.
In currency trading, the seller buys one currency in one financial market and sells it in another in order to profit from the difference between prices at certain time intervals. It’s the same process in the stock exchanges, but in this case, one considers the difference between the squares, not the time factor.
This type of process often happens with people trying to cash in on stocks, bonds and others. It is an advantageous and profitable strategy with great liquidity and extremely fast results. This is why it has caught the attention of many interested in cryptocurrencies.
WHAT IS BITCOIN ARBITRAGE?
Let’s move onto Bitcoin arbitration. This is the most secure way to make money with a cryptocurrency today. It is about applying the same reasoning as the approach with other assets or the seller acquiring a quantity of coins in one exchange and passing it to another as long as the value is higher in it.
The operation somewhat resembles the common type of bitcoin trading that happens in exchanges, the trade. However, this transaction only considers the time variable, ie. traders expect their virtual assets to appreciate after a period of time, while arbitrage works with two interconnected factors: time and the intrinsic price difference in different exchanges.
There are also subdivisions of this concept: transfer arbitration and instant arbitration. The transfer requires a process of transferring an amount of bitcoins from an exchange to another in order to allow for completion.
Thus, there is an associated time, which may interfere with profit forecasting. On the other hand, in instant arbitration, the sale happens at the same time that the coins are acquired, with a kind of connection between platforms that eliminates the need for transfer.
The process can be national or international and, of course, requires a lot of attention. Generally, it requires the user to have some value available on a particular broker with one requirement only.
This creates a great opportunity for profit and growth, but also some risks. Therefore, it is crucial to consider whether this type of transaction is really worth it – the subject of our next topic.
IS BITCOIN ARBITRATION WORTH IT?
As already mentioned, arbitrage is a less risky way to deal with high risk technology such as bitcoins. It is a safe and intuitive way to trade these assets and receive earnings. However, there are some aspects that should be studied before leaving for the first operation.
The rapid variation in prices needs to be acknowledged. This type of process considers two variables, but as we are talking about virtual currencies, significant changes can occur over a very short period of time. Then, people can take the winnings before the competitors, as this is a common activity that attracts more and more users.
The big enemies of profit in this scenario are taxes. They vary widely from one exchange platform to another, so they must be calculated before each buy / sell decision. If the difference between the values of an asset is positive, considering even the rates, the trader is facing a great opportunity. However, in some cases, the difference is not worth it, and by negligence the buyer ends up not analyzing it properly.
When connecting two different exchanges, there are many numbers and calculations that one needs to take into account. Withdrawal amount, transfer fee, deposit fee, sales order etc. All of these must be weighed before each choice.
Bureaucracy itself is considered as an obstacle as well. After all, the delay with the transfer can create an operational barrier that prevents the user from selling the asset when it was worth more.
Even with the disadvantages, arbitrage is still a great way to raise money with bitcoins. Profit may be higher and faster than in traditional operations, since there are more options and possibilities for the people who invest. You can further explore volatility and achieve incredible results with the right knowledge.
HOW DOES AUTOMATION WORK?
Fees and values are a complex part of the calculation necessary to carry out this transaction. As we have seen, they are many and vary depending on each platform analyzed. For this reason, one of the users’ solutions to optimize profitability is to utilize automation.
With the help of automated systems, it is possible to track quotes throughout the day, recording their variations and identifying points where profit is best. Intelligent algorithms define where it is most advantageous to buy and sell, providing insight to those who trade and, in some cases, even performing operations instantly.
Software remains available at all times and transmits the panorama of the values in each exchange. They even allow yield simulations, with analysis of how much can be achieved in each scenario. The assistance of these applications allows to mitigate the risks mentioned above.
WHAT ARE THE ADVANTAGES OF AUTOMATION?
Let’s now study some benefits of arbitrage automation.
If a transaction with many values and rates is highly error-prone when executed by a human being, systems can accomplish this quickly without these failures. They simply follow the flow that has been set and do not get out of it.
With this, the user can eliminate potential problems that could become worse and hinder profits. Compliance between platforms and with transaction records is made with higher quality, and the trader only focuses on managing their bitcoins.
These processes are done in a shorter period, which allows good opportunities to be seized.
Remember that time was mentioned as a factor that interferes with profit? With automation, this risk is diminsihed, as automated systems remain in continuous operation and perform bureaucratic activities in an agile and simple manner. Everything flows very quickly, predictably, contributing to the expected yield.
The aid of the software allows a broader view of the possibilities and what can be done with bitcoins.
If before the trader had a limited view, not very clear because of the complexity of fee management, automation allows the expansion of knowledge, with an accurate analysis of exchanges and values, as well as volatility over time and time.
LESS USER EFFORT
One of the main advantages of automating any task is that you are free for other activities. By delegating the arbitration and management function to these processes, for example, the user can focus on their core work or even see beyond, earning money with less effort.
Dealing with bitcoins can be tricky, especially with regards to security. A small mistake in the analysis process may lead to people losing money while putting their wallets at risk. Having an automated platform is interesting because this problem is reduced, as the systems manage the information in an integrated manner and do not have compromising failures.
WHY RELY ON A SPECIALIZED EXCHANGE?
As we have seen, success in a Bitcoin arbitration process largely depends on the exchange chosen. The platform must provide the necessary agility and more comfortable rates to enable users to profit and exploit opportunities quickly.
Support from a partner company in bitcoin trading processes is critical to success. With the work of a highly skilled team, the negotiator has a complete view before each decision. This assistance also helps to strengthen security.
Another advantage is the greater ease with each transaction. The consistency of a specialized broker helps streamline processes as the team employs strategies to reduce time and better manage the complexity involved. Thus, the results are the best possible, by exploiting great opportunities.
HOW TO CHOOSE THE IDEAL BROKER?
We’ve got some tips on how to choose the ideal broker. It is essential to pay attention to some special factors, such as the experience of the company. This will be important in order to assess whether the option is safe or not. An exchange that has been in the market for some years is certainly a more consistent and higher quality alternative, as it has gone through several scenarios.
Another factor is the fees. The user must consider the values and study carefully whether there is a possibility of profiting from them, bearing in mind also the bureaucracy associated with the transfer, whether or not it exists.
Is the exchange nimble? Does it offer security-enhancing features? Does it work with additional technologies to satisfy users and exceed their expectations? Evaluate these factors as well, before you get to the best option.
Bitcoin arbitrage is one of the least risky approaches to achieving profitability with cryptocurrency. Although it involves a long process that requires detailed analysis, it is a very worthwhile operation. To optimize results, it is critical to have a good platform, one that is reliable, fast and offers lower rates, such as Bleutrade.