Bitcoin multi currency hedging strategy
firstly, the scope of cryptocurrency is the smallest, including digital currency or virtual currency. For example, we can say that bitcoin is a kind of digital currency / virtual currency, but we cannot say that digital currency / virtual currency is a kind of bitcoin
furthermore, only currencies based on blockchain Technology (including cryptography and encryption algorithms) can be called cryptocurrencies. So cryptocurrency is a word specially prepared for bitcoin, Ethereum, and a lot of currencies based on blockchain technology. For example, CT currency and trip currency on the coin exchange platform
2. Legal currency
means that it does not represent the real goods or goods, and the issuer has not fulfilled the obligation to cash the currency in kind; A currency that becomes legal currency only by government decrees. The value of fiat money comes from the owner's belief that money will maintain its purchasing power in the future. Money itself has no intrinsic value, that is to say, when paper money comes into being, legal tender is essentially the paper money that can be circulated according to the law.
In short, the principle of brick Arbitrage: buy low and sell high, buy money from the place with low price and sell it at the place with high price, that is to earn the price difference of different platforms
but there are three risks in moving bricks:
A. time difference of currency transfer: it takes a certain waiting time to pick up or deposit the currency, so it may miss the best trading time
B. currency price fluctuation: if the currency price fluctuation is relatively large and the process of moving bricks has not been completed, the price difference has disappeared
C. platform problems: some trading platforms may shut down services from time to time, or even run away
principle: carry out brick arbitrage on two platforms at the same time to avoid the risk of "time difference of currency transfer" and "currency price fluctuation"
before moving bricks: the brick moving platform must support the same currency transaction, and the brick moving platforms must be able to transfer currency to each other
Step 1: price difference calculation. There are handling charges for currency trading and currency transfer, so you have to calculate the cost according to your own funds. Only when the price difference reaches how much can it be profitable to move bricks
Step 2: simultaneous operation. Buy BTC on the low price platform and sell BTC on the high price platform. At this time, the number of BTC holdings remains unchanged and the number of usdt increases You need to pay attention to transaction fees.)
Step 3: balance funds. It is difficult to predict which platform has a lower price and which has a higher price e to the price difference. Therefore, the two platforms that move bricks need to prepare usdt and BTC. When the price difference appears, it is convenient to move bricks There are also handling charges for cross platform currency transfer.)
the above is the principle and steps of risk-free arbitrage using BTC and usdt. It also has a big name: quantitative hedging. The fundamental purpose is to earn usdt, not BTC
You can take a closer look at this: Web linksIn recent years, the price of bitcoin has risen rapidly, attracting a large number of people. A large number of "virtual currencies" followed suit. In 2017, the price of Leyte increased by 476%, the price of Ruibo increased by 54 times, and the price of ether increased by 13 times. Different from sovereign currency, the "credit" basis of "virtual currency" is mathematical algorithm, and its price depends on the reliability of the algorithm and market confidence. There are many technical defects and loopholes, and its value foundation is very fragile
Asia Pacific future financial research institute, believes that the establishment of all kinds of bitcoin trading venues has neither been approved nor supervised. To enlarge the scale of transactions, it is necessary to provide leveraged transactions such as financing and melting coins. This has aggravated the price shock and bubbles, and the public has been involved in such transactions without any legal protection. There are huge potential financial risks