Arbitraging between different exchanges

Arbitrage is just a fancy word which in lay terms is defined as the practice of quickly buying and selling currencies in different markets in order to make a profit. This one is a bit higher risk than starting your own Bitcoin faucet but the reward is greater.

Arbitraging between Bitcoin exchanges entails buying bitcoins at lower price from one exchange and selling it to another exchange at a higher price. The popular exchanges to arbitrage between are Bitpanda, Coinbase and Local Bitcoins.

For you to buy/sell between these two exchanges you should have an account in both of them. To open an account with Coinbase,click here ; to open an account with Bitpanda, click here; to open an account with Local Bitcoins, click here. Note, when you go to Local Bitcoins, you can change the country to the country of your choice.

The guiding principle is you buy from an exchange selling Bitcoins at a lesser Dollar value and you sell to an exchange with a higher Dollar value of Bitcoins.
To calculate the current exchange rate of bitcoins to other currencies check out Bitcoin Exchange Calculator.

A major drawback to arbitraging for bitcoins is that, arbitrage opportunities works best and is more profitable inside small markets. However, as it stands now Bitcoin market with a market cap of over $15 billion dollars can hardly be qualified as small.

Another obstacle is that many bitcoin sites have expensive withdrawal processes and charge fees for trading bitcoins against fiat currencies, such as U.S. dollar, Japanese yen or Euro. These expensive fees may quickly erode any spread that might exist between competing bitcoin exchanges. resulting in net loss than net gains.

This drawback does not still preclude the fact that in good conditions arbitraging bitcoins is a means of making money.