NEXTBOND: bitcoin arbitrage asset
Monday 01 February 2016
Price difference on bitcoin exchanges represents an opportunity for easy, safe profits.
Bitcoin is by far the most liquid cryptocurrency, but there are still inefficiencies across its many exchanges. It’s not unusual for prices to be several dollars apart, one way or another. Those differences can be exploited by arbitrage: buying at the lower price and simultaneously selling at the higher one.
Whilst this can be done manually, it’s far easier with custom software that continually checks the most active exchanges and automatically executes the trade when it sees a discrepancy. It also requires having a significant amount of funds on both the exchanges in question, since even with bitcoin withdrawing money from one exchange to another takes too long; opportunities may last only seconds. The more funds you have in place, the most profit can be made before you have to readjust your balances to make sure the BTC and USD are in the right place.
NEXT and NEXTBOND
Sasha Ivanov, known across the web as Coinomat after his instant exchange business of the same name, has been coding and running such bots for years, with significant success on both the bitcoin and altcoin markets. With two associates, he has now consolidated his arbitrage bots into one umbrella fund, called NEXT, which also holds several revenue-generating assets. NEXT is hosted on the Nxt blockchain, meaning it can be traded peer-to-peer like a cryptocoin. Dividends are paid fortnightly, in the native currency NXT.
Returns on NEXT depend on the different elements of its portfolio, and fluctuate with their performance. Arbitrage is relatively low-risk, though, as well as fairly lucrative. At present, Coinomat finds that it is possible to secure around 4% return per month. That’s where NEXTBOND comes in.
NEXTBOND is a secondary asset, also hosted on the Nxt blockchain. One NEXTBOND represents one bitcoin, which is then used for arbitrage on a series of exchanges - initially OKCoin and BTC-e but also Huobi, Bitfinex, Bitstamp and BTCChina. Returns are fixed at 2% per month, and paid daily in the form of superBTC (an asset that can be traded on Nxt’s Asset Exchange but is fully backed by bitcoins in the Multigateway, a distributed exchange, from which they can be withdrawn into a regular wallet). Anything remaining after NEXTBOND’s 2% per month payouts goes into NEXT profits.
Arbitrage: Buy low, sell high - simultaneously
Thus NEXTBOND is something like a high-interest account for bitcoins. It’s not a get-rich-quick scheme, but not a bad place to park funds if you have them. Cash can be withdrawn at any time: there is no lock-in period.
Details of the bots running on different exchanges can be found on the NEXT and NEXTBOND website.
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