Getting bitcoins can help ensure profit on anyone’s end as an investor. The various methods of getting bitcoins have also played a big role in the process, allowing users to buy bitcoin with PayPal and other payment methods and other advantages every investor can use! With the help of the online space, bitcoins are always guaranteed to be accessible!
Of course, getting into bitcoins will make you do some research especially when you’re looking to earn a profit with bitcoin’s rise in value. There are two known ways one can get bitcoins, both of which are well-known to be in use today: bitcoin arbitrage and bitcoin mining.
Bitcoin Arbitrage vs Bitcoin Mining
What is Bitcoin Arbitrage?
Bitcoin arbitrage is the practice of buying bitcoins on an exchange where the price is significantly lower and then selling those bitcoins at an exchange at a higher price.
How Does It Work?
For this process to work, simply look at different bitcoin exchanges across the web. Compare the prices they are selling and buying bitcoins for and then, choose the bitcoin exchange to buy your bitcoins from, preferably at a lower price.
Then, once your bitcoins have been purchased, take the opportunity to sell your bitcoins on another bitcoin exchange at a higher price, which can help guarantee a profit on your end as an investor.
The Advantages of Bitcoin Arbitrage
- Easy Monitoring of Assets
Since the process involves both buying and selling bitcoins on different exchanges, this allows you to keep track of your assets easily. You can also keep track of bitcoin’s present value, which can help you buy and sell bitcoin at the price you want for profit.
- Detailed Account
Having a detailed account of your assets is another advantage you can look forward to with bitcoin arbitrage. Bitcoin arbitrage comes with a detailed calculator you can use to keep track of other aspects of the process such as fiat currencies, withdrawal fees, transaction fees, and many more.
- Opportunities for High Profit
With being able to sell bitcoin above market price to take into consideration, there are more opportunities for you to earn money with bitcoin! Market price can differ depending on each bitcoin exchange you use for the process, which can also offer more opportunities for higher profit!
The Disadvantages of Bitcoin Arbitrage
- Can Take Time
Doing bitcoin arbitrage can take time to complete. It can require a lot of account verifications, time to wait for fee deposits, and other factors to consider with this disadvantage.
- Can be Pricey
Since bitcoin arbitrages involve working with bitcoin exchanges, many of them have fees and other expenses to be paid for. Prices can vary depending on the exchange, so it’s best to take this into consideration.
- Market Manipulation
Market manipulation is something that is viewed as negative in the crypto world, and with bitcoin arbitrage being used, it can also be subject to such.
What is Bitcoin Mining?
Bitcoin mining is a process that involves the creation of new bitcoins through the work of “miners” solving complicated mathematics problems from data hidden inside “blocks”.
How Does it Work?
This process involves miners working together on a single block at the same time. They all have to guess a mystery number called a ‘nonce’, where they apply the hash function from the resulting data and combine it with the data block. The first miner to solve the problem wins 1st place and is rewarded bitcoins for their hard work.
The Advantages of Bitcoin Mining
- Different Data Blocks to Mine
The blockchain technology comes with different data blocks for bitcoin miners to work on, which means more mining pools being formed and more opportunities to earn bitcoins.
- Work with Different Miners
Bitcoin mining wouldn’t be possible without the help of mining pools, which helps lessen the time it can take for miners to solve a block.
- Increased Chances of Earning Bitcoins
With the help of mining pools, there is also an increased chance for every miner to earn bitcoins as a reward. The more miners working together, the more chances for a high profit.
The Disadvantages of Bitcoin Mining
- Can Take a Lot of Data and Energy
One of the major drawbacks of bitcoin mining is that it can take a toll on data and energy consumption. This drawback can hamper progress on bitcoin mining.
- Increased Risk of Malware
Bitcoin mining sites are everywhere. But, this can also be a cause for concern as there are sites that have malware in them, which is dangerous for the system as a whole.
- Network Connectivity Errors
Since bitcoins are operated online, this also goes with bitcoin mining. If there are network connectivity errors, there is a chance where the whole process can crash.
Which is More Profitable?
Overall, both bitcoin arbitrage and bitcoin mining prove to be profitable methods of getting bitcoins. Bitcoin arbitrage, however, seems like the more practical method to rely on. It’s easy to manage and can ensure a profit to be earned, which is great for both buying and selling bitcoins.
Why Try at Your Own Risk?
Either method you try, though profitable, comes with their own fair share of risks. Which is why it’s important for every user to acknowledge these risks and get around these methods responsibly. At the end of the day, user responsibility will always be a key factor in the profitability of both bitcoin arbitrage and bitcoin mining.
Author: Joshua Marcus M. Bautista