From being utilized for faster and more efficient payment transactions to extending help through crypto donations in nearly an instant—bitcoin is continuously offering remarkable developments in the world, specifically in today’s financial system. A lot of crypto enthusiasts commonly use this digital asset to gain profits, and among the most popular methods they use are buying and selling bitcoin for crypto trading and engaging in the market for crypto investment opportunities.
The good thing about using bitcoin is that all transactions can be done online. All you need is a smartphone, tablet, or laptop, a stable Internet connection, a bitcoin or digital wallet, and a reliable cryptocurrency exchange platform where you can perform these income-generating activities. However, if you’ve already done these methods and you want to take a shot in other ways of making money with BTC, bitcoin arbitrage is among the best options for you.
Bitcoin arbitrage defined
First things first, for us to further understand how this process works, let’s have a quick look at what the term “arbitrage” means. Arbitrage is referred to by Investopedia as “the purchase and sale of an asset in order to profit from a difference in the asset’s price between markets.”
Arbitrage works by buying an item or an asset in a market at a lower price and then selling it in another market at a higher price. Let’s say, for example, you purchased a video game console in an online market at 35 USD. While browsing the Internet, you’ve discovered another market online that sells the same console at a higher price. So, you put the item on sale on that market at 60 USD. The difference between the price you bought it (35 USD) and the price you sold it (60 USD) will be your profit from this arbitrage. From our example, the profit will be 25 USD.
In the context of cryptocurrency, bitcoin arbitrage works similarly, which is through buying BTC in one marketplace and then selling it on another platform at a higher price. But before going to our next point, here’s a quick and interesting crypto arbitrage fact: did you know that bitcoin arbitrage became very popular in the crypto space two years ago? This is because of the event dubbed as the “Kimchi Premium,” which happened on January 9, 2018.
During this time, bitcoin’s price was remarkably and surprisingly lower in South Korea than it was in the United States. How far down, you ask? BTC’s rate was 43 percent lower in South Korea at that time. This very unusual event urged a lot of crypto traders to immediately buy BTC in South Korean exchanges and have them sold in crypto marketplaces outside the said country—a perfect example of bitcoin arbitrage.
How to profit from bitcoin arbitrage during the pandemic
Now that you’ve learned what bitcoin arbitrage is and how it works, let’s discuss how you can make money from it while staying at your home. Here’s a list of what you should have and why you need them.
- Funds for buying BTC. You need to have enough resources or money, which you will use to buy bitcoin. If you are curious about the minimum amount of BTC to buy, here’s a piece of good news for you: the amount to be utilized for this method is entirely up to you, as there’s no minimum or maximum amount required for bitcoin arbitrage.
- Bitcoin wallet. After preparing the funds, the next thing you need to have is a bitcoin or digital wallet where you will store your BTC. Transactions such as buying and selling are also done through digital wallets, so it is essential to have your own. If you don’t have one yet, some crypto exchanges offer digital wallets for free.
- Reliable crypto exchange platforms. There are hundreds of bitcoin marketplaces available today, and while they might all look the same at first, among the crucial things to consider is whether an exchange is strictly adherent to financial regulatory conditions. Remember, you are entrusting your money to them, so be sure to look for exchanges that have a strong and notable safety reputation.
Aside from continually checking various marketplaces for arbitrage opportunities, it is also beneficial to keep an eye on the Bitcoin price chart to give you an idea of its price movements.
Engaging in BTC arbitrage can be daunting at first, and that’s why you must know how to do it efficiently and effectively.
Take advantage of the lockdown by learning and exploring new ways to make money with bitcoin. Do your research and familiarize yourself with the ins and outs of the process. Once you get the hang of it, you’ll surely yield remarkable results and satisfying profits before you know it.