Earnings from cryptocurrency exchange

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Exchange activities are attractive because they allow you to make money from any movements in the cryptocurrency market. You can’t get rich quick here, but you also can’t instantly go broke, like in trading or investing.

There are three main ways to make money:

Own exchange service.

Arbitrage on exchanges.

Arbitrage exchangers and exchanges.

Each of them let’s consider in more detail.Earnings on cryptocurrency exchange opened on the smartphone.

Instructions for opening an exchanger from scratch

From each transaction online exchanger receives 1-2%, in rare cases 3%. The possible income depends directly on the total volume of transactions for the month. To earn $1000 start-up project needs to exchange at least $100,000, because at the start will have to attract customers with a low commission.

There are three ways to start from scratch:

Free through p2p services. Only working capital will be needed.

Paid budget – buying a ready-made script exchange service. Need $3000-5000 for the engine and its configuration + money for advertising + working capital.

Paid expensive. Custom website engine development (from $10,000 to $50,000) + marketing budget + working capital.

P2P-platforms.

Platforms connect those who want to sell and buy cryptocurrency, provide fair transactions. Each user has open statistics on the number and volume of exchanges made, feedback from counterparties.

How to get started:

Choose a suitable platform (e.g. Localbitcoins, Binance p2p) and register.

Verify your identity, as you will need it anyway to raise your status and limits.

Make a deposit in the cryptocurrencies you will work with.

Prepare bank cards, verified e-currency wallets (Yumani, WebMoney, QIWI, etc.).

Choose the direction of the exchange (for example BTC-Tinkoff, BNB-Sberbank), put your orders.

Operative processing of requests of clients. At the end, it is desirable to ask to leave a review to quickly gain a good reputation.

You may start up your company in 1-3 days and with minimal means (from $1000). As soon as the mechanism of a particular service becomes fully understood, you should increase the amount of funds and exchange directions.Main window of P2P service from Binance.

Buying the script

The engine should be purchased immediately with the service of installation and refinement. The second option is to first hire a specialist, and then on his recommendation pick up the engine, which will be convenient to work with. Attempting to independently configure the person without experience can lead to failures in the work of the site and the loss of money.

The average cost of ready-made code – from $3000 to $5000. Installation work will cost another $500 to $1000. You can’t save money on this.

In contrast to the p2p sites, there is no ready-made customer base, so you must budget another $300-500 per month for advertising in social networks, messengers, search engines.

Will need from $50,000 working (better $100,000).

Needed cards all popular banks in the country with extended limits.

It is important to choose the target audience right away, to make the service fit only for it (for example, blockchain game lovers). The startup will quickly go bankrupt if it tries to compete in the broad market.

The name of the site should be memorable and suggestive of trust. It is good to use domain zones like finance, biz.

To ensure the safety of all funds on the balance of the exchanger, you should buy a hardware wallet Trezor or Ledger. With their help, you can transfer cryptocurrency even from a virus-infected, hacked computer.

When the number of exchanges grows to 30-50 per day – hire a support staff. This workload is realistic to achieve from scratch in 6-8 months of work.

Turnkey project

Writing the engine and the shell exchange site from scratch will take several months. This will take into account all the wishes on functionality, design, security. It is worth investing in such a development only if the entrepreneur already has experience in business on the exchange of cryptocurrencies, or involves a team of professionals in this field.

Investments will be up to $50,000 for development, $3,000 monthly for advertising and marketing, at least $100,000 working capital. It’s impossible to describe the launch of such a project in one or two paragraphs.

Cryptocurrency Arbitrage

Arbitrage is the search for quotation differences in order to make a chain of consecutive deals and get an instant profit. With arbitrage, there is no need to track market trends or monitor coin rates. The goal is to monetize the difference in the value of the asset here and now. There are no market risks, only technical ones (exchange irregularities, unpredictably long transaction time).

The most important thing in the work of arbitrageur – speed of actions. If he does not have time to sell the asset within the limits of the caught price corridor, he can stay in the loss.

The two main directions:

  • Intra-exchange.
  • Inter-exchange.

Within one trading floor.

Concludes in the search for erroneous quotes on the exchange, which occur when the platform managers do not have time to bring the rates of coins and tokens closer to the market average. Such situations are common in fiat/cryptocurrency pairs.

Having detected an error, the trader creates a chain of trades that will eventually generate income. For example, to deposit $10000, buy 14290 XRP with this money, then exchange it for 1420 EOS, and sell it for $10400. By pulling off this transaction, he would get a net income of $400, which was known precisely from the beginning. There is no risk of going bankrupt or just staying in the black.

What you need to know:

Technical support calculates errors quickly, so the trader may have from half an hour to 2-3 minutes to monetize them. Any delay will cause the window to close and the opportunity to make money will remain unused.

Many platforms have built-in protection against intra-exchange arbitrage – all orders are executed with a delay of 15-20 minutes. It is necessary to find out in advance the real speed of requests processing (it is spelled out in the rules of use).

Every year it becomes more and more difficult to use this method, as exchanges are improving their trading and analytical mechanisms. Because of this, most traders switch to the next method.

Interplatform.

Inter-exchange arbitrage consists of finding price delta for the same asset on different exchanges. A cryptocurrency is bought on a site with a low price, transferred to a platform with a high price, and sold there.

For example, on Binance Ripple is quoted at $0.6, but on Huobi it is already at $0.63. If you buy 1000 coins on Binance, transfer them to Huobi and sell them there, the profit will be $30.

An important point! Always consider the commission for deposit and withdrawal of funds, because it can greatly affect the final result. Execution times of exit transactions must also be known in advance and must not exceed 20-30 minutes. With slow execution of requests, the rate on one of them can change in an unprofitable direction.

Arbitrage can be especially profitable on decentralized exchanges with an automatic market-maker. There, the price of assets in a pair is set depending on the share of a particular cryptocurrency in the liquidity pool. If there is no trading within a particular pool, the value is frozen, even if all other exchanges are experiencing a sharp change at that moment.

The arbitrator who first finds such a pool lagging behind world prices, buys the still cheap coins there, and sells them on any of the exchanges at the current price. Immediately after the purchase, the price in the pool changes, becoming as close to the market average as possible. Came a little later speculators do not have time to make money.

In order to find tasty prices faster than competitors, professionals use bots-parsers, which constantly monitor the market, signaling every window of opportunity.

Here are a few such programs:

  • Centobot;
  • Cap.Club;
  • Gekko;
  • PHP Trader;
  • Leonardo.
  • Professionals with a large bank (from $20,000) earn $1000-3000.

Prospects

Peer-2-peer exchanger is the easiest to launch. It is enough to register on the site, make a deposit and you can start working. Such activity can bring a monthly income of $300-500 after 2-3 months. It will increase with the growth of reputation, credibility and available limits.

Own site will require from 1 month of development, one-time investment of $55000, of which $500,000 will be spent to purchase bitcoins and altcoins. With the competent development of 3-4 months, it is real to reach an income of $ 3000 / month.

Earnings for arbitrage between exchanges, exchangers depends strongly on available funds. With a bank of $1000 it is realistic to count on $20-40. If trader has enough money to place deposits at several exchanges and not to spend for withdrawal commissions, then already on second month he can reach profit of $200-400.