What is Arbitrage?
The concept of arbitrage cryptocurrency trading is to look for an opportunity to exploit the pricing differences between market exchanges. Then be able to purchase something new at a lower value compared to what you could potentially sell it for on another market. Why is it so popular in South Korea? South Korea puts a higher value on cryptocurrency compared to other markets.
This tactic comes from the stock market where it doesn’t matter how bad the market is, it was a tool for traders to still make profits.
How it works
To keep it simple let us just focus on the Bitcoin market. What you are looking for is a price difference between two different markets for Bitcoin. Once you find a Bitcoin market that is selling Bitcoin at a lower price. You then will have to sell the Bitcoin you bought at a higher price in a different market. This can be risky since Bitcoin fluctuates constantly. Therefore this is not a foolproof way at which you can make money.
Why is it so Popular in South Korea?
Like I mentioned above the price of cryptocurrency was much higher in South Korea. During the boom of Bitcoin people were making 10-15% returns on exchanges! If traders will trading large amounts of money then they would be getting huge profits just from buying and selling bitcoin. Thousands of people in Korea got rich off of this bitcoin arbitrage. They would ask friends or relatives in the States to buy Bitcoin and then sell it in Korea for huge profits.
This is not a brand new concept but it is a skill that is handy to know. The time for doing this might have passed as the markets are a lot closer together. Also, there are a lot of automated cryptocurrency traders out there that are much faster than human to spot an arbitrage.
