Who is this blog post for?
- You’re looking for a platform that will find cryptocurrency arbitrage opportunities between centralized or decentralized exchanges (a cryptocurrency arbitrage opportunities scanner). And you’re looking for an answer – can you make money from arbitrage opportunities?
- You’re a programmer and you’re thinking of creating your own arbitrage bot
Does chasing arbitrage opportunities manually still make sense?
TLDR: Not for making profit. Easy money attracts many people making it totally not easy
Earning money with arbitrage as an idea is quite simple. Let’s take a look at the example.
Imagine potato sellers offer different prices in two cities. Obviously they don’t have an unlimited amount of potatoes to sell. Each seller has 200 kg.
- In city A potatoes cost $100
- In city B potatoes cost $110
- That gives a $10 price difference which is 10%
- Let’s call it a spread
If you
- Buy 200 kg of potatoes in city A for $100
So you spend 200 * $100 = $20 000 - Drive to city B
- Sell 200 kg of potatoes in city B for $110
So now you have 200 * $110 = $22 000 - You’ve got a profit
- The profit is 10% of $20 000 is $2000 (minus transport cost)
Let’s assume there is a hypothetical, unrealistic arbitrage opportunity for ETH/BTC currency pair
Using ethereum and bitcoin just to have some familiar names.
- At exchanges A the price of ETH/BTC is 100 BTC for 200 ETH
- at exchange B the price of ETH/BTC is 110 BTC for 200 ETH
That means there is a 10% spread between two exchanges and that’s an arbitrage opportunity
Is it as easy as potatoes to make money with? In theory, yes 🙂
- Buy 200 ETH at exchange A for 100 BTC
So you spend 200 * 100 = 20 000 BTC - Transfer ETH to exchange B
- Sell 200 ETH at exchange B for 110 BTC
So now you have 200 * 110 = 22 000 BTC - You’re going to have 2 000 BTC more which is pure profit.
In theory, that’s easy money assuming you found the opportunity.
Easy money attracts many people so it becomes a race of many people to use the same opportunity. However, each exchange has a limited amount of cryptocurrency.
Who gets the profit? The fastest ones.
If you’re trying to manually buy, transfer and sell you have to know that there are hundreds (thousands?) of programmers who have automated that.
What you’re doing within seconds, they are doing with milliseconds.
If you want to compete and try to earn something, you’d better create a bot and not do it by hand. And even that is very difficult.
Market is flooded with bots doing the arbitrage. You have no chances competing with machines and earn coins
How do I know?
You can observe it yourself. Because spreads usually keep around 1%. It’s just not possible without bots intervention to keep such low spreads between exchanges with huge volumes.
I’ve been working on an arbitrage scanner for a long time.
I hoped people could use it and earn something. I had only one man reported earning 800 euro.
Does it make sense to make your own automated cryptocurrency arbitrage bot?
Probably not. Competition is really high. I’ve tried to create an automated one.
I’ve also contacted programmers who have been working on arbitrage bots for a long time.
If you follow this path and create your own one, you’re probably wasting your time if your main goal is to earn money.
Sign up for free at https://autocoin-trader.com so you can
- watch live arbitrage opportunities
- track your cryptocurrency portfolio
If you want to use an arbitrage scanner strictly for making money you have to know it’s really difficult. If you dedicate your time and effort, you might get something in return.
