Most people limit their investing to stocks and bonds. And these are indeed good investments. But what if you want to diversify beyond traditional investments? Although there are several alternative investments, few have the track record of Bitcoin arbitrage funds. The fund I’ve allocated some money to pays about 12.95% annually.

What is Arbitrage?

Investopedia defines arbitrage as “buying in one market and simultaneously selling in another, profiting from a temporary difference. This is considered riskless profit for the investor/trader.”Think of it this way: you see a car on sale at a dealer for $20,000. You know someone on the other side of town is willing to buy this car for $21,000. You could call that person up, tell them you’ll sell them the car for $21,000, buy it from the dealer for $20,000, and you’ve made $1,000 for little or no risk!

BitBays Arbitrage Fund(BBAF) is created through the cooperation of BitBays and Bitcapital to carry out cross-market arbitrage. The Fund is connected to all major global exchanges and generates income by purchasing Bitcoin in lower priced markets and selling them in higher priced markets. The fund operates continuously and automatically, and executes paired buy and sell transactions near simultaneously.

 What is Bitcoin?

Bitcoin is a digital currency that can be bought, sold and traded online. It isn’t controlled by central banks and only a finite number of Bitcoins will ever be created. Coindesk has a great article with more background on what bitcoin is.

 What is Bitcoin Arbitrage?

Bitcoin is traded on a variety of exchanges: Kraken, Coinbase and BitBays are just a few examples. At any given time the price of bitcoin is different on the various exchanges. For example, Bitcoin could be trading for $500 on Coinbase, but $501 on Kraken. So, you could simultaneously buy 1 Bitcoin on Coinbase for $500 and sell it on Kraken for $501 to make $1. Doing this manually would be time consuming and only worth it with large sums of money. Instead, BitBays created a fund that does the arbitrage automatically.There are three flavors of Bitcoin Arbitrage Fund at BitBays: BTC, USD, and CNY. Each of them works the same way: the fund automatically buys and sells bitcoins on various exchanges to reap profits. The only difference between the three funds is the currency the profits are stored in and the yield paid.If you were to invest in the BitBays USD arbitrage fund, although the gains still come from buying and selling Bitcoins on different Bitcoin exchanges, those profits are then converted and stored in dollars. This way, your profits are not vulnerable to bitcoin price fluctuations. 

 Arbitrage funds can be regarded as a current deposits that pay you daily. The funding is used for BitBays to do the transaction of USD/BTC or CNY/BTC. The risk is very low as you can redeem your principal at any time. Not to mention, the transaction fees is low, you can also convert your principal into other USD or CNY to invest in the fiat arbitrage funds to gain a higher return. This investment is recommended by btcinvesting blog.

Pros:

• risks approach zero
• earning is paid daily
• can redeem anytime
• low redeem fees (0.02%)
• can convert your investment into USD or CNY to gain higher returns

Cons:

• Unregulated investment (but BitBays has headquarters in London, Hong Kong and Beijing)

How do I invest?

The way I have invested in the BitBays Bitcoin USD arbitrage fund is as follows. First, I buy Bitcoins on Coinbase. There are a variety of places where you can exchange dollars for Bitcoins but I’ve used Coinbase for years and I like it.

If you buy $100 worth of Bitcoins from CoinBase using this link you’ll get $10 in bitcoin free.

Once you’ve bought some Bitcoin on CoinBase sign up for a BitBays account using this link.

Once you have a BitBays account and have purchased bitcoin on Coinbase, transfer those coins to your wallet at BitBays, which you would then sell for dollars and then use the proceeds to buy into the USD arbitrage fund. Another option is to transfer dollars directly to BitBays, but I have always gone the route of transferring in BTC to BitBays.

I’ve been invested in the Aribtrage funds at BitBays since  June 12  2015. I think it is an interesting and so far, a profitable alternative investment. It’s important to understand the risks and make your own choice with the help of a licensed financial adviser. Decide how much risk you can tolerate to determine how much you’re willing to invest in Bitcoin arbitrage. Although it’s an interesting way to diversify your investments and does have potential for good returns.

Thank you!

Thank you for reading and for commenting! I read them all! 

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