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UrbanFebruary 22, 2019

4min873

Japanese companies are making bold overseas moves on the international cryptocurrency scene, with one company expanding into the Southeast Asian market, and another investing in an Israeli startup.

BitPoint, a Financial Services Agency-licensed cryptocurrency exchange, says it has struck a partnership with a Bangkok-based blockchain company named BiTherb. Per a press release, the companies say they will launch an exchange in the Thai capital.

BitPoint says it has successfully received four trading licenses from the Securities and Exchange Commission (SEC) of Thailand, the regulatory body that polices the country’s cryptocurrency markets. This would make BitPoint the first overseas exchange to win trading permits since the SEC began regulating Thai exchanges.

Readers will recall that the SEC has looked to clamp down on perceived overseas offenders after being handedsweeping new regulatory powers last year.

And according to media outlet Nikkei, the new exchange – which is slated to open in April – will trade in some five currency pairings “including Ripple and Bitcoin.”

BitPoint is owned by Remixpoint, a large business group with interests in the energy management, services and auto trading industries. BitPoint already has a number of exchanges in North Asia, including South Korea and Taiwan.

Thailand population:

First Foreign Crypto Exchange About to Enter Thailand Market 102
Source: The World Bank

_____
Weekly LocalBitcoins, a peer-to-peer bitcoin marketplace, volume (in bitcoin) in Thailand:

First Foreign Crypto Exchange About to Enter Thailand Market 103
Source: Coin.dance

Meanwhile, earlier this week, Recruit – the Japanese employment platform that owns companies such as Indeed and Glassdoor – has announced that it has made its first significant investment in the cryptocurrency market. The company made an undisclosed investment in Israeli crypto startup Beam, developer of a confidentiality-centric token that makes use of the Mimblewimble protocol.

Recruit made its investment through the USD 25 million RSP Blockchain Fund, a subsidy that it established in Singapore in November last year.


UrbanFebruary 21, 2019

21min942

South Korean tech giant Samsung just made major announcement that might give a strong boost to the cryptocurrency mass adoption. The company confirmed that its new flagship smartphone Galaxy S10 features “a secure storage backed by hardware, which houses your private keys for blockchain-enabled mobile services.”

The company did not provide any further details about the storage yet.

Meanwhile, videos started to appear supposedly showing the Samsung Blockchain Wallet:

Embedded video

Korean Cryptocurrency & Blockchain News@BlockchainROK

???????? – Samsung now priming their phones with Blockchain tutorials. The wallet integration on the Galaxy S10 has been confirmed… even after they denied it. Trying to keep Apple on their toes?

103 people are talking about this

Galaxy S10: Official Introduction

Preorders for the Galaxy S10, Galaxy S10+ and Galaxy S10e begins on February 21. Pricing starts at USD 899.99 for Galaxy S10, USD 999.99 for Galaxy S10+ and USD 749.99 for Galaxy S10e, according to the company.

BREAKING! Samsung Adds Crypto Wallet to Its New Flagship Galaxy S10 102
Source: Twitter
BREAKING! Samsung Adds Crypto Wallet to Its New Flagship Galaxy S10 103
Source: Samsung

As reported, in January, Samsung once again found itself in another round of claims that its new phone will feature a crypto wallet.

Supposedly leaked images that were published by concept designer Ben Geskin and several other known tech leakers on Twitter showed what appeared to be the new Samsung Galaxy S10 phone with a built-in crypto wallet called “Samsung Blockchain KeyStore.”

As South Korean blockchain consultant Kim Mi-ra previously told Cryptonews.com, “If Samsung phones do indeed come with cryptocurrency wallets pre-installed, it will change everything – it may open the floodgates for smartphone developers over the world, as well as many South Korean firms. Many of these companies are now chomping at the bit, waiting for a chance to integrate their businesses with cryptocurrency.”

Korean news outlets also speculated that Samsung may seek to integrate the wallet function with its Samsung Pay, a mobile payment and digital wallet service, operations.

Smartphone unit shipments of Samsung worldwide by quarter from 2010 to 2018 (in million units):

BREAKING! Samsung Adds Crypto Wallet to Its New Flagship Galaxy S10 104
Source: statista.com

In December, the tech giant rejected claims that it plans to release a cold storage crypto vault on its Galaxy S10 phone, saying it is nothing but rumors. However, Samsung has previously filed three trademarks to be registered with the European Union Intellectual Property Office (EUIPO). It includes “Blockchain key box”, “Blockchain Core” and “Blockchain KeyStore”.

“Blockchain phones” have been a hot topic of discussion several times over the past months and years. Phones such as HTC’s Exodus 1, Sirin Labs’ Finney and Pundi X’s XPhone have been announced in recent months. In addition, another South Korean electronics firm, LG is also reportedly working on a secret crypto project.
____

Galaxy Unpacked 2019 live stream from San Francisco:

Some other specifics and features of the Galaxy S10 series:

 

  • Galaxy S10 is made with Samsung’s best screen yet, the world’s first Dynamic AMOLED display
  • Ultra Wide Lens: A first for the S Series, Galaxy S10 offers an Ultra Wide Lens with a 123-degree field of view, like the human eye.
  • Samsung introduces Wireless PowerShare on Galaxy S10, making it possible to easily charge Qi-certified smartphone devices and even compatible wearable devices.
  • Smartphone supports 5G networking technology, which allows “to download a full season of a TV show in minutes.”
  • The new AI software on the Galaxy S10 automatically optimizes battery, CPU, RAM, and even device temperature based on how you use your phone, and continues to learn and get better over time.
  • Galaxy S10 comes with Intelligent Wi-Fi that allows for an uninterrupted and safe connection by seamlessly switching between Wi-Fi and LTE, as well as alerting you of potentially risky Wi-Fi connections.
  • You will get the largest storage capacity available on a Galaxy device—the S10+ even comes with 1TB of built-in storage –and the ability to add an additional 512GB microSD card for up to 1.5TB.

UrbanFebruary 20, 2019

1min743

Ethereum co-founder Vitalik Buterin has revealed key details about his cryptocurrency holdings. As part of an ask-me-anything session on Reddit, Buterin revealed that some 10% of his non Ethereum-based crypto holdings are in the Bitcoin, Bitcoin Cash, Dogecoin and ZCash cryptocurrencies.

He also revealed that he possesses some 10% less than the value of his ETH holdings in Ethereum-based tokens including Kyber Network, Maker, Omisego and Augur in his portfolio.

In a frank disclosure, Buterin also added that in the last year he has received payment – although he stopped short of specifying the amount – of a “few advisor tokens” from cryptocurrency projects, including some of the tokens he named “above” (presumably in the Ethereum-based token category).

The Ethereum co-founder urged other prominent cryptocurrency advocates to follow suit with similarly open disclosures, stating, “I’d definitely support more people actively involved in protocol decision-making making such statements.”


UrbanFebruary 19, 2019

4min867

The bitcoin market may be about to see another wave of buying, one measure of sentiment among traders suggests.

According to data from crypto exchange Bitfinex, the ratio of short-to-long trades in the bitcoin market has hit 0.68 – the lowest level since early August last year. A short-to-long ratio below 1 indicates that there are more traders who believe in higher prices, than those who believe in lower prices.

While a “long trade” involves buying an asset in anticipation that its price will rise, a “short trade” happens when a trader places a bet that the price of an asset will fall, by borrowing the asset and then selling it in the market. The trader’s goal is then to buy back the asset at a lower price later, and pocket the price difference as his profit.

During the past six months, we have often reported on this ratio reaching record-high levels as a sign that there may be too many traders positioned on the long side of the trade, which may lead to sharp reversals in the price. This time, however, the ratio is far from extreme levels, suggesting that the recent bitcoin rally may still continue for some time.

Bitcoin short-to-long ratio on Bitfinex. The blue horizontal line indicates equilibrium between short and long trades:

One More Sign Suggests Possible End of the Crypto Winter 102

Meanwhile, the total value of the short trades on Bitfinex has also dropped. More than just indicating that the bullish sentiment has increased, this also suggests that the overall interest in bitcoin trading is picking up.

As of press time on Tuesday (UTC 06:20 AM,) the total value of BTC/USD longs on Bitfinex was BTC 27,906, down slightly from more than BTC 38,000 on Monday – the highest level in 11 months. Meanwhile, the value of all short positions on the same exchange was just 19,152 BTC, indicating that the sentiment is shifting to more bullishness for bitcoin. However, it remains to be seen how long it will last.

Bitcoin short trades in red and bitcoin long trades in blue on Bitfinex (using 7-day moving averages):

One More Sign Suggests Possible End of the Crypto Winter 103

Moreover, market sentiment towards top coins is also improving, as reported on Monday.

After jumping by almost 5% in the past 24 hours, Bitcoin is still trading above USD 3,900, while ethersurpassed USD 147 and XRP is up to USD 0.32.


UrbanFebruary 18, 2019

3min897

Japan’s stablecoin race has begun to hot up – with one of the biggest banks in the country and the world announcing it has struck a deal with Alipay, the financial arm of Chinese business giant Alibaba.

The Mizuho Financial Group, operator of Japan’s second largest (and one of the top 20 largest banks in the world) bank – Mizuho Bank – says it has developed a smartphone app that will allow customers to pay at a wide range of Japanese stores using its forthcoming J Coin token. The stablecoin is slated to be unveiled next month. Alipay, for its part, is said to be keen to increase the overseas reach of its services, and will soon allow customers to pay for goods in Japan via QR code-powered J Coin transactions.

Per Mainichi, the partnership has been developed to target Chinese tourists in particular, as Alipay has some 700 million Chinese users.

Mizuho’s stablecoin has already won the support of 60 domestic banks, and a Japanese financial expert says Mizuho wants to score an historic first with its token, to be pegged 1:1 with the Japanese yen.

Hiroyuki Yamamoto, a Tokyo-based banking consultant, told Cryptonews.com, “It looks like Mizuho is aiming to win the race to become the first Japanese megabank to get its stablecoin into circulation. By all accounts, the bank wants to ensure its tokens are accepted at all the major shopping hotspots popular with Chinese tourists.”

As previously reported, a number of other banks in Japan are also keen on launching their own stablecoins, including Mizuho’s closest rival, Mitsubishi UFJ Financial Group. Other major stablecoins also in the pipelines include a token from GMO Internet, operator of some of the country’s largest cryptocurrency-related businesses.

Meanwile, last week another banking giant, JPMorgan announced its plans to launch JPM Coin, the centralized digital token created by the company to instantly settle payments between institutional clients. The bank claims it doesn’t have plans to make JPM Coin, which is pegged 1:1 with US dollar, available to individuals at this stage.

Also, Juan Villaverde, leader of the Weiss Cryptocurrency Ratings team, in a recent opinion piece argued that stablecoins are not true cryptocurrencies.

“Stablecoins are simply digital assets acting as proxies for a particular fiat currency. That’s what makes them stable. But it also takes away any semblance of achieving the core mission of cryptocurrencies — to give the people a new form of money only they control,” he said.


UrbanFebruary 17, 2019

4min750

Cryptocurrency exchange Cryptopia that has recently suffered a hack has regained access to its building, and the New Zealand police say that the exchange could reopen – but the exchange’s founders remain silent on this issue.

On Wednesday, the New Zealand police that is investigating the hack said that their investigation no longer prevents cryptocurrency trader Cryptopia from getting the business running again, as it was closed back in January following the hack which cost users an estimated USD 23 million. However, the exchange has kept silent on this possibility, only tweeting on Thursday, “Update: The police have now given us access back to our building, while they continue their investigations. Our staff are working relentlessly to evaluate the funds that were stolen.”

Meanwhile, detective Inspector Greg Murton told local news outlet stuff that, “Cryptopia management have full access to their facility and business premises and the police investigation is not preventing their business from getting up and running again. However only Cryptopia management can speak to when it may be open again.”

Also, Murton said the police investigation was continuing, both in New Zealand and in the US, in collaboration with the FBI and international experts. “No timeframes as to a conclusion to the investigation can be provided at this time,” Murton said.

On February 7, the police said that “excellent progress is being made in the investigation.”

Kelvin Chandran, CEO of SingleSource, a blockchain-based identity and risk scoring platform, told the news outlet that the challenge, for the bad guys, is being able to liquidate the digital assets without getting caught: “We track the funds because we want to make our clients aware of which wallets are tainted, to comply with anti-money laundering regulations.”

As reported, only two weeks after the infamous Cryptopia hack, another 17,000 Cryptopia wallets were drained of ETH 1,675, according to blockchain analysis protocol and platform Elementus. They concluded that “Consistent with our earlier hypothesis, Cryptopia no longer has the private keys to their Ethereum wallets and the hacker does.”

Meanwhile, Cryptopia is far from the only exchange that is facing trouble. More than a dozen lawyers converged on a courtroom in Halifax, Nova Scotia on Thursday to make their pitches to represent 115,000 cryptocurrency traders owed USD 70 million in cash and USD 190 million in Bitcoins and other digital assets in the QuadrigaCX cryptocurrency debacle – and it was revealed that the exchange has no money at all, Vancouver Sun reported. More money is expected to be made available from Jennifer Robertson, widow of QuadrigaCX CEO Gerald Cotten who reportedly passed away in December, the report added.

And exchanges are also not the only ones having difficulties – to put it mildly. A man from New Stanton, Pennsylvania, reported nearly USD 525,000 worth of cryptocurrency vanished from his online account, TribLive reported, citing local police spokesman. According to the report, the 54-year-old man realized the money was missing this week, but it could have disappeared anytime since early December. The spokesman said he couldn’t name the specific currency the man owned, but that it was tied to the gold standard.


UrbanFebruary 16, 2019

8min773

Google is opening up crypto. Just as the Californian search giant transformed the early internet in the late ’90s from something strange and sprawling into something you could navigate at the click of a few buttons, it has turned to the no less sprawling world of cryptocurrencies.

On February 5, it launched a range of new search tools as part of its BigQuery Public Datasets program. Now, any developer, entrepreneur, journalist or anyone else can search and analyze the blockchains of eight major cryptocurrencies, enabling them to detect patterns in transactions and relationships between addresses, for example.

And aside from providing us with a powerful way of understanding how cryptocurrencies are actually being used, these tools also mark what may be the beginning of Google’s further exploration of crypto. But while such involvement could bring crypto a few more big steps towards the mainstream, it raises the risk of centralization.

Now you can surf the blockchain(s)

 

Yet in addition to simply making the transaction histories of the above eight searchable, Google’s new release also lets users take advantage of Blockchain ETL (extract, transform, load), a new tool built largely by independent developer Evgeny Medvedev. As stated above, this lets users analyze transactions patterns and the relationship between addresses, and while this might not sound especially monumental, the ability to define patterns means that you can identify pretty much any kind of crypto-related behavior.

For instance, one example mentioned in Google’s blog is the detection of mining pools, based simply on checking transaction flows to and from addresses, while another could be the identification of trading bots that may be inflating the price of a cryptocurrency.

These are therefore powerful tools, and it’s likely that they’ll provide a growing stream of insights for anyone working on a new crypto project. This is the view taken by Dr. Mervyn G. Maistry, the CEO and co-founder of blockchain-services company Konfidio.

“Having a public database opens many opportunities for development,” he says. “The data can be turned into highly advanced blockchain analytics: distribution of assets across addresses, defining ownership of multiple wallets, qualitative and quantitative analysis of transactions, network current state tracking and analysis and much more.”

Another example provided by Google’s blog backs up this prediction. Google used the new tools to measure the Gini Coefficients – which measure the (in)equality of wealth distribution – of the eight currencies included in the BigQuery database, finding that “Dash is remarkably well distributed relative to all other cryptocurrencies examined here.”

Gini coeficient, top 10K balances
Values range between 0.0 and 1.0, with completely distributed wealth (all members have the same amount) mapping to a value of 0.0 and completely accumulated wealth (one member has everything) mapping to 1.0.

What Google's Recent Move Means for Crypto? 102
Source: Google

Such insights will go a long way if developers want to build a new cryptocurrency or platform that’s more accessible to a wider audience. What’s more, Maistry thinks they’ll provide the perfect launchpad for Google to develop even more powerful tools, which will obviously have a positive knock-on effect on the quality of future crypto projects.

Wider Significance

So Google’s new tools will no doubt have plenty of uses for developers of crypto- and blockchain-related projects. But what does the company’s delving into crypto mean for the industry on a deeper level?

“Google’s official emergence into the blockchain space reinforces the fact that tech giants have long realized the potential of blockchain tech,” explains Sky Guo, the CEO of the enterprise-focused smart contract platform Cypherium.

“More subtly, though, this move also suggests that the risk and suspicion surrounding the technology has generally softened, as the technical benefits of blockchain start to poke through into mainstream narratives.”

There is a belief among other industry figures that Google’s move towards crypto could also encourage other big corporations to follow suit, as suggested to Cryptonews.com by Rutger van Zuidam, the founder and CEO of the blockchain-focused innovation program Odyssey.

“Google’s official emergence into the blockchain world might also inspire banks, governments, and other traditional industry players to take a second look at the potential of open public blockchains, as well as their own privately owned infrastructure,” he says.

Of course, while Google’s increasing immersion in crypto might help bring about greater adoption and better platforms, there could be certain downsides, van Zuidam warns.

“We also have to be really careful when we build dependencies to large data-collecting entities. The whole point of working with blockchain is to decrease these kind of dependencies and to increase the sovereignty and privacy of the users.”

The risk of centralization (or at least an overdependence on a centralized organization) is something that other commentators warn against, with crypto expert and B9Lab founder Xavier Lepretre pointing out in conclusion that Google’s involvement will be a double-edged sword.

“Google’s blockchain discovery tools come with Google’s advantage: scale,” he says. “No doubt, plenty of developers will find ways to use, or even monetise, them. However, the tools also come with Google’s disadvantages, which are centralisation and the possibility of censorship.”

And even though Lepretre acknowledges that centralization makes sense in this case (since huge amounts of data need to be extracted by a trustworthy entity), it could ultimately undermine the decentralized ethos on which crypto has sold itself up until now.


UrbanFebruary 15, 2019

3min864

Some of Japan’s biggest internet companies are making big moves in the country’s cryptocurrency industry – with Yahoo Japan making a large-scale investment, and a Rakuten-fronted group pushing for the regulator to reform and clarify proposed crypto tax and initial coin offering policies.

Yahoo Japan made a bold debut on the scene last year, snapping up a 40% stake in the Financial Services Agency-approved TaoTao cryptocurrency exchange (formerly known as bitARG). And the company has now struck a funding deal with crypto tax experts Aerial Partners. The scale of Yahoo’s investment is undisclosed, but Aerial says it has recently received at least USD 1.6 million in funding from a range of companies, including Yahoo Japan’s Z Corporation crypto business arm – as well as two venture capital companies.

The deal comes days after Aerial Partners inked a deal with Tokyo-based FSA-approved exchange Quoine, which may allow the exchange’s customers to conduct tax-related calculations using the former’s software tools.

For its part, Yahoo Japan is also keen on launching its own crypto exchange, and the company has previously indicated that it may well do so in the coming months – with the spring of 2019 its tentative target, subject to the exchange attaining FSA approval. The company will also launch a cryptocurrency-focused media venture next month.

Meanwhile, the Japan Association of New Economy, a business group fronted by the CEO of crypto-keen e-commerce giant Rakuten, has called on the FSA to clarify its initial coin offering (ICO) stance and amend tax policies in light of a study group report issued late last year.

The association, whose other members include Japanese internet and gaming companies, issued a press release asking the FSA to consider taxing cryptocurrency transactions at the same 20% flat rate as it applies to stock- and foreign exchange-related deals. It also wants the FSA to allow traders to conduct tax-free crypto-to-crypto transactions.

The FSA’s 2018 report indicated that the regulator may consider creating several different categories of ICO, and applying a different regulatory framework to each category. The association wants the FSA to clarify these categories and asked for exceptions to be made for certain cases, as well as asking that exchanges’ “responsibilities not be made excessive” when dealing with ICOs and tokens.

Rakuten is also known to be keen on launching its own exchange in Japan, last year purchased domestic exchange Everybody’s Bitcoin and is looking to launch its own cryptocurrency – which it hopes to integrate and launch in Russia through its Viber chat app.


UrbanFebruary 10, 2019

14min1185

The price differential of cryptocurrencies can be quite substantial across different exchanges. This, of course, provides an excellent opportunity for arbitrage traders.

What is arbitrage trading?

In the financial markets, arbitrage trading refers to simultaneously buying and selling an asset or a security on two different exchanges to generate a profit from the price differential found on set two exchanges.

For example, if the price of a security asset is trading at USD 100 on exchange A and USD 99 on exchange B, a trader can buy the asset for USD 99 on exchange B and sell it for USD 100 on exchange A at the same time to generate a largely risk-free profit of USD 1. That is how arbitrage trading works.

These arbitrage opportunities found on different exchanges are actually what keep the market relatively efficient. In other words, it ensures that prices are roughly the same across different exchanges for the same asset because if that is not the case arbitrage traders will come in and capitalize on this profit opportunity immediately.

In the stock markets, arbitrage trading is usually conducted through high-frequency trading software that seeks out arbitrage opportunities and automatically executes trades on behalf of the investor. Hedge funds and proprietary trading companies are the most common users of these algorithmic trading strategies in the stock market.

Cryptocurrency arbitrage

As price differential for cryptocurrencies can be quite large across exchanges, there is ample opportunity to make arbitrage trading profits in the digital asset space. Even the most liquid crypto asset bitcoin trades at different price levels on different exchanges.

Just take a look at the Price Tracker on Cryptonews.com:

A Rich Man’s Game: Crypto Arbitrage Trading 102
February 8, UTC 08:00 AM.

The widest differential can be found between geographical regions. On Zimbabwe’s leading digital currency exchange Golix, for example, bitcoin traded at a 30 to 40% premium to the international market price last year. That was because there was more demand for bitcoin in Zimbabwe due to its dire economic situation but fewer options to purchase the digital currency than in other countries. Hence, the price traded higher in the Southern African nation.

Substantial price differentials can also often be witnessed when comparing Korean exchanges and U.S. exchanges. For example, during the peak of 2017, the regularly higher prices for cryptocurrencies in South Korea driven by strong local demand have led traders to dub this price differential the “kimchi premium”.

Having said that, cryptocurrency price differentials also exist on exchanges based in the same jurisdiction and these can be more easily exploited than trading across borders as there is no added currency risk when cashing out into fiat currency.

Cryptocurrency prices vary across exchanges due to differences in liquidity, a lack of international price referencing standards, and the inefficiency of making fund transfers between exchanges.

Moreover, prices on some exchanges, e.g. Bitfinex, might be higher due to fact that it’s expensive to withdraw fiat from an exchange and this increases demand for cryptocurrency as this is a much cheaper way to move your funds from the exchange.

Who are the main cryptocurrency arbitragers?

Due to the large amount of capital required to profit from arbitrage trading opportunities, the two main players in the crypto asset arbitrage space are so-called “whales” and hedge funds.

Whales – early adopters of cryptocurrencies who now have millions in cryptocurrencies – can place big enough trades so that it makes sense to profit from a USD 50 price differential in bitcoin. They know how to navigate exchanges and have experience in locating the necessary liquidity to successfully execute an arbitrage trading strategy in these markets.

The same goes for digital currency-focused funds. Crypto hedge funds have the capital and the resources to successfully deploy an arbitrage strategy and several of the over 225 specialized funds in this field utilize this approach as part of their investment strategy.

Interestingly, in January 2018, Singapore-based hedge fund Kit Trading, a unit of Vulpes Investment Management, announced that it has raised USD 10 million for a new bitcoin arbitrage fund that will specifically seek to exploit cryptocurrency price differentials across various exchanges.

“When it comes to the question of whether cryptocurrencies are the future of money or a millennial tulip mania we are agnostic. What we firmly believe in is arbitrage, and arbitrage opportunities abound in this nascent asset class,” Steve Diggle, CEO and Founder of Vulpes Investment Management, said back then.

However, the company has not disclosed results of its arbitrage fund.

Should you adopt this trading strategy?

As a small investor, it is difficult to engage in arbitrage trading in the cryptocurrency markets as you require a large amount of capital for the strategy to be profitable. Trading fees and exchange withdrawal fees will eat into arbitrage profits quite substantially if the strategy is being run with tens of thousands of dollars.

For this strategy to be profitable, an investor needs a bare minimum of USD 100,000 to get started but even then the potential profits would be rather small. Hence, cryptocurrency arbitrage is really a rich man’s game.

Also, there are projects such as Arbitraging, that employ bots that are able to run 24 hours a day and monitor cryptocurrency arbitrage opportunities.

Crypto arbitrage challenges

In light of the inefficiencies found in the crypto asset markets, cryptocurrency arbitrage looks like an absolute ‘no-brainer’ at first sight. However, this trading strategy is not without its challenges, which are mainly related to the comparatively small size of the digital asset market and the inefficiency of its infrastructure.

Liquidity

Firstly, there is the issue of limited liquidity. To generate a profit in arbitrage trading, traders need to simultaneously buy and sell a cryptocurrency in large volumes to benefit from a relatively small price differential of only a few percent. However, despite bitcoin’s growing market capitalization and daily trading volumes, it is still a comparatively small asset class compared to the likes of stocks and bonds, which means its order books are rather light in liquidity.

If you want to buy and sell BTC 20,000 to benefit from a small price differential, for example, it will be hard to find exchanges where orders of this size will be easily filled for the arbitrage trade to be profitable. Trades of this size can easily move the market.

Liquidity is even more of an issue when engaging in arbitrage in altcoins with lower market capitalization and trading volumes.

Transferring funds between exchanges

Secondly, there is the need to transfer funds onto or between exchanges to capitalize on the arbitrage opportunity. In some instances, this can take too long, at which point the arbitrage opportunity might already be gone. Also, cryptocurrency transaction fees need to be taken into account when sending funds around. While transaction fees are generally quite low, if you move funds constantly they do add up.

Trading fees

Thirdly, aside from standard cryptocurrency transaction fees, trading fees also need to be taken into consideration as they directly impact your arbitrage trading profits. The major exchanges charge between 0.1% and 0.3% commission for each trade. This needs to be multiplied times two for arbitrage trades as there are always two legs to each trade.

While there are a few zero-fee exchanges, the most liquid exchanges that you will need to trade on to successfully arbitrage the market all charge trading fees.

Withdrawal fees

Fourthly, since you have to transfer funds to and from exchanges to conduct arbitrage trading as well as transfer your funds back into your personal wallets at the end of your trading day, exchange withdrawal fees also need to be taken into consideration.

Withdrawal fees are usually a small nominal amount. However, if you are transferring funds several times a day from exchange to exchange and back into your wallets, these fees will eat into your profits just like transaction fees and trading fees do.

Cashing out into fiat currency

Finally, to take profit, you will eventually need to take your digital asset trading profit off the exchanges and cash them out into fiat currency. Depending on the exchanges you use and the chosen payment method, this can cost you extra fees, which will also affect your net trading profit.

It is, therefore, advisable to find arbitrage opportunities that generate a trading profit of more than two percent as 0.5% can easily be eaten up in fees to make the trade happen.

Crypto arbitrage risks

While arbitrage is considered to be a risk-free trading strategy, there is a risk in cryptocurrency arbitrage trading that cannot be disregarded. That is the risk of unexpected losses stemming from holding large amounts of cryptocurrency on centralized exchanges.

Centralized digital asset exchanges are susceptible to operational errors as well as cybersecurity breaches, which can lead to the loss of funds for account holders. Given that cryptocurrencies are still largely unregulated in most parts of the world, there is little legal recourse for investors who lose their digital funds. Furthermore, only very few exchanges insure their clients’ funds against unexpected losses.

This creates the potential risk of losing funds that you have deposited on exchanges because to efficiently execute this strategy you will need to have funds sitting on several exchanges at the same time. Obviously, once you have finished your trading for the day, you can withdraw both your digital and fiat currency. However, as mentioned above, this will incur further fees.

To generate small arbitrage profits, traders are required to put a large amount of funds at risk on exchanges. Hence, the risk of losses due to holding funds on centralized exchanges need to be taken into consideration and weighed against the potential profits that this trading strategy can bring.


UrbanFebruary 8, 2019

2min989

After almost two weeks of trading sideways, the crypto market suddenly exploded on Friday.

At the time or writing (UTC 05:08 PM) all top 100 cryptocurrencies by market capitalization are in green.

Bitcoin jumped by more than 8% in the past 24 hours and is trading close to USD 3,700, while Litecoin (LTC) registered strongest gains among top 10 coins (+28%). LTC was the first among top 10 coins that suddenly jumped this Friday.

In a few hours, the total market capitalization increased by USD 10 billion, to USD 122 billion.

 

As everyone tries to guess the reason for the explosion, according to The Independent, the latest rise follows news that bitcoin’s hashrate – the amount of power its network consumes to process transactions and generate new units of cryptocurrency – is at its highest level since November 2018.

Speaking to The Independent before the latest price surge, David Thomas, director of the UK-based cryptocurrency broker GlobalBlock lamented the negativity in the market but hinted a spark could set it off in a positive direction once again.

“Something needs be the catalyst to get things going again. Unfortunately, global uncertainty for a multitude of reasons is driving many to become more risk averse and so whatever that spark is, it needs to be significant,” Thomas was quoted as saying.

 

 



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