Jailbreak, low profits, risk-free arbitrage in the currency circle is a dream or a bubble?

The second-hand trafficker, the Beijing dialect is commonly known as "the old man."

The substance of its work refers to buying a certain commodity on the production or supplier side, and then selling it, but in fact it is an intermediary. Essentially, it uses information asymmetry to make a profit.

The difference is that most of them are looking for industries with relatively narrow channels and relatively closed contacts between buyers and sellers. It is also because of their existence that in the sales process of certain products, there are opportunities for profiteering.

This behavior has a new saying in the currency circle, called moving bricks.

Unlike the bricks that we usually understand at the construction site, people who engage in bitcoin moving bricks do not have to face the hot summer days and face the loess.

Instead, the brick-moving bricks often need to keep an eye on the market changes whenever and wherever possible, and constantly explore the market changes.

However, can the cryptocurrency moved in and out really make money?

What is arbitrage to move bricks?

Arbitrage to move bricks, also known as "holding arbitrage", is to invest in the difference between the platform to make a profit. Sometimes, the price of the same currency on different trading platforms is different, so the difference between the two is often the same.

To put it simply, moving bricks means buying the same currency from a relatively low-priced trading platform, then transferring it to a transit platform such as a wallet, and then choosing a high-priced trading platform to sell it, thereby earning a middle spread. .

Generally speaking, because the cryptocurrency market is in the early stage of barbaric growth, some governments have not yet formed a systematic regulatory system, and some countries that form supervision have their attitudes toward cryptocurrencies, so that countries encrypt. The degree of currency development is uneven.

In addition, looking at the history of cryptocurrency development, its overall price curve is still on the rise channel, coupled with people's long-term optimism about cryptocurrency.

Eventually, despite the difficulty of moving bricks, people are still rushing.

There are two ways to move bricks. The first is the simplest. When it is determined that there is a difference between a certain cryptocurrency between the two countries, the cryptocurrency is bought from a low-priced country, and the high-priced country is mentioned and finally sold. This will earn the difference.

However, it is worth noting that due to the long process of multinational coin withdrawal, it is a few hours faster and a few weeks slower. In the process of filling one, the two spreads are likely to be smoothed or even reversed.

In addition, there is another method that is more commonly used by bricklayers, that is, bricklayers have a certain amount of cryptocurrency in both countries. When there is a price difference between the two markets, bricklayers can buy a certain amount of cryptocurrency in the low-priced market and simultaneously sell the same amount of cryptocurrency in the high-priced market.

The above two methods are commonly used in the currency circle players.

On September 4th of that year, the “Announcement on Preventing the Risk of Subsidy Issuance Financing” issued by the Central Bank and other seven ministries and commissions clarified that the nature of token financing is an unapproved act and requires the immediate cessation of various types of token financing. Organizations and individuals that complete the financing of token issuance should make a settlement arrangement.

However, despite the global decline in bitcoin prices, the inconsistency of domestic regulatory policies has led to large price differences between domestic bitcoin prices and foreign markets.

Therefore, under the guidance of significant profits, the trend of moving bricks between the players of the currency circle has become popular.

Some players said that from 15:00 on September 4 to 12 o'clock on September 5, there was a significant spread on the platform at home and abroad. He was profitable by moving the "bricks" between the platforms in less than 12 hours.

As time went to the end of 2017, Bitcoin broke through a record high and came to $20,000.

"At the time, the entire cryptocurrency market was in a boiling position." The brick player Lei Bing (a pseudonym) told 31QU, "This carnival, it should be a great deal for Korean cryptocurrency investors."

Lei Bing said that the domestic bitcoin price was around 120,000 yuan, while the Korean bitcoin rose to 150,000 yuan.

“I contacted the hairpin in Korea for the first time and used his identity information to register the account of the Korea Exchange.”

Therefore, Lei Bing bought the coin in China, then went to the Korean exchange to sell it, and then sent him to help the Korean won from the bank, and then transferred the money back to the country through the private sector, and it was repeated.

Lei Bing said with pride: "This wave, I made a lot of money, but how much, can't tell you."

Despite making a lot of money, I am also afraid.

Lei Bing said that because of the difference, South Korea’s foreign exchange system was almost ruined by movers from all over the world. A large amount of Korean Won’s transfer will be monitored and can only be cashed out by the bank, and once the bank’s cash withdrawal exceeds the prescribed amount, it will cause The police's attention, a little careless, will be jailed.

In addition, the Korean won earned in South Korea cannot be exchanged directly and transferred back to China. Instead, it is necessary to find a “trustworthy” private institution to transfer back to China with some “unconventional” means. In the meantime, private institutions will also charge a high amount of hand-over fees. If the amount of money earned by moving bricks is not a lot, it will not pay off.

"In fact, moving brick arbitrage is not as profitable as you think." Lei Bing told 31QU, "At least not making money now."

Moving brick arbitrage does not imagine making money

The essence of the currency arbitrage is to earn a difference between the two currencies of the same platform. However, there is a premise for the difference in earning, that is, the price difference between the same currency in different platforms must be sufficient to pay the user's transaction cost (handling fee, cash withdrawal fee, fluctuation of currency price during the withdrawal time), otherwise moving bricks Not cost-effective.

In addition to the uncertainties brought by the market fluctuations for moving bricks, another role that cannot be ignored in the brick-moving field: exchanges. Its every move will also affect the interests of the movers.

"From the point of view of the exchange, the phenomenon of brick arbitrage is a way of liquidity drainage. Sometimes, market value maintenance makes prices higher than most platforms, for the purpose of drainage."

Xiao Heilong said that as an exchange that plays a vital role in the arbitrage of bricks, the behavior of some users to move bricks is not very exclusive.

"But everything has a degree. Do not rule out does not mean that you don't care at all." Xiao Heilong added.

Exchanges are hoping to increase the exposure of some new currencies, so they will allow a certain amount of arbitrage, but if it is the mainstream cryptocurrency, the exchange is not willing.

Therefore, for the mainstream cryptocurrency, each exchange will arrange robots to detect. If arbitrage space is found, it will immediately fill in the order. In this way, the brick player will be unprofitable.

In addition, there is a risk of raising coins in general. As a regular player in the currency circle, few people can deposit a certain amount of funds on each trading platform.

In the process of arbitrage and relocation, users generally need to retreat funds between various exchanges to transfer funds from exchanges without arbitrage space to exchanges with arbitrage space. However, there is a difference in the timing of the withdrawal of the coin. It may have just been transferred. It is found that the original arbitrage space is gone. Even in the process of withdrawing the currency, the price of the currency has fallen, which is lower than the price of the original purchase. The mover not only has no profit. There will also be losses. In addition, constantly withdrawing money back and forth, the handling fee is also a small expense.

These are the risks to the movers.

At the same time, Jingdong Dashu believes that the reason for the large return of cryptocurrency bricks is because the market has just formed, the news between them is blocked, and the price of the same currency between different exchanges tends to have a large price difference. However, at this stage, the information flow between the various exchanges around the world is very smooth, so there will be very little price difference.

Moreover, among the various platforms, in addition to the inconsistent price of the popular cryptocurrency such as Bitcoin, even if there is a difference between the USD and other cryptocurrency currencies, the difference is not large, one by one, the basic There is very little profit margin.

Quantitative transactions or acclimatization in the field of cryptocurrency

“In the case of moving bricks, there are generally two kinds of people.” Xiao Heilong said: “One is a small player who simply arbitrage, and another is a professional brick-laying team with a special arbitrage program.”

Moving bricks through a special arbitrage program is a quantitative transaction.

The person in charge of an exchange said that quantitative trading, sometimes referred to as automated trading, refers to the replacement of artificial subjective judgments with advanced mathematical models, which greatly reduces the impact of investor sentiment volatility and avoids extreme market enthusiasm or pessimism. Making irrational investment decisions, there are many kinds of quantitative transactions, including cross-platform bricking, trend trading, hedging arbitrage, triangular arbitrage, intertemporal arbitrage, ETF rotation arbitrage and so on.

Since the 1970s and 1980s, quantitative trading has become an important trading method in the global financial market, and has spawned a huge financial system. Nowadays, with the overall improvement of the blockchain industry and the expansion of the digital currency trading market, quantitative transactions have also been introduced into the digital currency market by a large number of teams. At present, there are hundreds of quantitative teams.

"Quantification is very simple, the principle is exactly the same as the player's normal operation, but the gameplay is varied." Senior currency quantifier Otto told 31QU, "Moving bricks is just one of the ways to make money."

Otto said that quantifying transactions is nothing more than expressing people's ideas through machines and code.

People always want to sleep, and it is impossible to keep their concentration and reason at all times. But the machine can.

As long as the user sets the parameters of the transaction in advance, the user can make the operation flow of buying and selling.

"The only thing worth worrying about is the imperfections of the machine and the code itself, which can lead to bugs in the transaction process." Otto told 31QU, "But even so, compared to people, the machine made fewer mistakes. ”

However, although Otto is extremely esteemed for quantitative trading, it is believed that although quantitative trading is speculative, it is a high IQ player who can play. But another quantitative player, Ren Chong (a pseudonym), expressed different opinions.

He believes that compared with the quantitative trading of traditional financial markets, the quantitative trading of cryptocurrency market has various internal and external problems due to the premature development stage and its own characteristics, resulting in quantitative trading in the cryptocurrency market. Play well in its role.

First of all, compared with traditional stock exchanges, cryptocurrency exchanges are mostly in the field of regulatory blanks, which cannot be sufficiently open and transparent. Secondly, the cryptocurrency market is too “unscrupulous”.

Ren Chong said that the exchange as a rule-maker broke the rules and disrupted the market order; the investment institutions were arrogant and insider speculation; hacking attacks frequently occurred. These all pose greater challenges to the risk management strategy of quantitative transactions.

Orange is Huainan, it is orange, and in Huaibei, it is 枳. Born out of the traditional financial field of quantitative concepts, in the emerging cryptocurrency investment circle, how many have shown unacceptable.

For quantification and moving bricks, some people think that this is a game of high IQ players, and some people think that the appearance of these phenomena disturbs the normal order of the currency circle.

In the 2019, when the market is gradually warming up, in the face of a more volatile currency situation, what role can quantitative investment and arbitrage move in the currency circle? We don't know.

Text / 31QU Zhang Yu