Cryptocurrency has become one of the daily investment options for many people. However, the complex user interfaces and various investment jargon of exchanges often leave beginners feeling overwhelmed before they even take their first step.
In order to address this issue, “WEB3+” has launched a series of reports called “Cryptocurrency Investment in Plain Language”. These reports aim to introduce the correct concepts of cryptocurrency investment, as well as the underlying logic, innovation, and latest trends.
What is “Brick Moving” arbitrage, and how does it work?
“Brick Moving” refers to buying an item at a low price in market A and then selling it at a higher price in market B.
For example, let’s say someone on PTT is looking to buy a PS5 for 20,000 yuan, but the PS5 is only being sold for 19,800 yuan on an online shopping website. In this case, you can place an order on the shopping website and then sell it to the user on PTT who is looking to buy, earning a profit from the price difference. This behavior is called “Brick Moving”.
In the cryptocurrency market, there are slight differences in the prices of coins between different exchanges. This allows users to buy at a lower price on one exchange and sell at a higher price on another exchange, earning a profit from the price difference. For example, if the price of the stablecoin USDT on exchange A is 30 yuan and on exchange B it is 30.05 yuan, users can profit by buying from A and selling on B.
How does Brick Moving arbitrage work?
Method 1: Manual Brick Moving
The simplest way to Brick Move is for users to observe the exchange rates of two exchanges themselves and manually go through the process of buying at a low price on exchange A and transferring the funds to sell at a high price on exchange B.
Method 2: Hedge Brick Moving
In the Hedge Brick Moving method, users need to have both fiat currency and target cryptocurrency on exchanges A and B. Once a price difference appears, they can immediately execute the trade.
For example, if the price of USDT on exchange A is 30 yuan and on exchange B it is 30.5 yuan, users can buy one USDT on exchange A and sell one USDT on exchange B to earn a profit from the price difference.
The purpose of this method is to solve the problem of the slow transfer of funds in manual Brick Moving, which may cause users to miss the best opportunity for profit. The process of buying and selling in the Hedge method with funds on both exchanges is also faster.
Method 3: Brick Moving Arbitrage Bots
However, the cryptocurrency market does not have price limits like traditional markets, making it almost impossible to monitor it 24/7 and easily miss profit opportunities.
In addition, buying cryptocurrency or transferring funds to another exchange incurs transaction fees (Gas Fees). Therefore, when calculating the actual profit from Brick Moving, these fees must be taken into account. By the time users carefully calculate and confirm whether there is a profit, the best opportunity may have already passed, as cryptocurrency prices are constantly changing.
In view of this, some cryptocurrency exchange operators have introduced “Brick Moving Arbitrage Bots” suitable for beginners. These bots automatically solve the pain points of not being able to monitor the market 24/7 and place orders. In simple terms, users only need to set their initial investment and the desired price difference, and the Brick Moving Arbitrage Bot will automatically monitor and execute the buy order on exchange A and sell order on exchange B.
Advantages and Risks of Brick Moving
Advantage 1: Diversifying Capital Risk
If users use a Brick Moving Arbitrage Bot to conduct trades in a hedging manner, the bot will only execute the buy and sell orders simultaneously when the price difference is confirmed to be profitable. In addition, by splitting the funds between two exchanges, users can ensure that even if one exchange collapses, they will only lose the funds in that exchange, avoiding the situation of losing all their capital.
Advantage 2: Suitable for Cryptocurrency Beginners
The process and concept of Brick Moving Arbitrage are simple, making it suitable for beginners or investors who have experience with arbitrage in traditional financial markets.
However, Zhang Hanlin, CEO of Taiwan’s exchange Bitgin, recommends using Brick Moving Arbitrage Bot tools provided by legal and compliant exchanges because there are too many difficulties in manual monitoring, timing of deposits and withdrawals, and other factors. In addition, it is important not to trust others and hand over funds for operation or use Brick Moving Bots of unknown origin to avoid being deceived.
Risk 1: Coin Price Exchange Rates
Both fiat currency and cryptocurrencies can experience price volatility. In a situation where prices rise and fall at the same time, users may face losses. In addition, if stablecoins are used as the target, there is still the risk of “unpegging”. If a stablecoin experiences a major collapse, users will bear the losses.
Risk 2: Poor Choice of Exchanges and Cryptocurrencies
Even if there is a price difference between two exchanges, if the trading volume of the cryptocurrency users want to Brick Move is very low, it may not be possible to buy or sell immediately, resulting in a failed Brick Move. Therefore, the choice of cryptocurrency and exchange is also crucial for success.
Furthermore, the process of depositing or transferring coins on some exchanges may require manual verification, resulting in a lengthy process and potentially missing the best Brick Moving opportunity.
For users who want to try Brick Moving, using a Brick Moving Arbitrage Bot provided by a legal and compliant exchange is the safest way.
※This article does not constitute any investment advice. Please carefully evaluate the risks before investing.
Proofreading Editor: Gao Jingyuan
