Not necessarily a crypto term, it’s a financial term. Basically in terms of financial assets, buying and selling the same asset through different gateways to take advantage of price differences.
You go in Europe, buy a Bitcoin
, move it over, sell it in China, you bought at €10,000 and sold at €15,000.There are different types of arbitrage:
- Triangular arbitrage, basically where you take pairings of assets - like EUR/USD, EUR/GBP, USD/GBP, and you would do triangular arbitrage between these pairs as they fluctuate.
- Latency arbitrage - looking for ways to beat the platform, a fast account and a slow account, and buy/sell within the time difference.
- There are more types.
Very difficult in mature markets, because mature markets tends to price out arbitrage opportunities. In immature markets, a blind rat with one arm could probably knock out an arbitrage opportunity on Bitcoin