What is Cryptocurrency

A cryptocurrency is a digital currency which relies on encryption for security and to verify transactions, and operates independently of any bank (i.e. has a decentralized control). Cryptocurrencies are records of transactions (blockchains) kept on a decentralized ledger/database which all members have access to, and which is updated whenever a new transaction is verified by a consensus mechanism.

Blockchain is a decentralized ledger of transactions that take place across a peer-to-peer network. When someone initiates a new transaction, say making a purchase with cryptocurrency, that transaction is validated through the peer-to-peer network and a new block is added to the chain.

Crypto Currency Arbitration

Arbitration is a strategy where a trader takes advantage of varying prices offered by brokers for particular cryptocurrencies to make a trade. A certain cryptocurrency may have a low rate in a particular market and a higher rate in another location. Therefore, a trader may buy a cryptocurrency at a lower rate and sell it at a higher price in a different country. The different rates can easily be exploited due to price differences. However, there are many factors that affect how much profit a trader may make through crypto arbitration, and such are the reliability of exchange, fee, low demand, transaction duration, fiat currency deposits, money on account, and exchange parameters.

Reasons for crypto arbitrage occurrence

  • Variation in crypto liquidity across exchanges
  • Transaction time variation
  • Different types of crypto exchanges available
  • The Supply vs Demand levels in the crypto markets
  • Different Currency rates
  • Spread and costs

Pros Of Crypto Arbitrage

  • Better Profit
  • Low Risk
  • Decentralized market
  • Don't need to rely on bear or bull markets
  • Wide Range of Opportunities
  • Cryptocurreny markeks are Volatile


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