El Dorado is a platform that helps you to keep your money safe using cryptocurrencies as cUSD, cEUR and BTC. Besides being a place to save money and enjoy the digital finance benefits, El Dorado offers the opportunity to earn money through his P2P marketplace. But, how you can do it? The answer is detailed on this article.
If you already know this word: congratulations! Surely you already know what arbitrage is and its benefits. If you don’t have any idea about what is arbitrage, you should keep reading.
In the financial markets, arbitrage is the practice to take advantage of price difference of the same asset in different markets. For this it is necessary to combine purchase and sale transactions, so you can get profit from it.
Why are there differences in prices of the same asset?
Maybe, it might sound strange that the same asset has different prices. However, this happens frequently due to the immaturity of the cryptocurrency market, so in high demand terms there are not enough offers to hold the same price worldwide, causing significant differences to take advantage of.
Basically, the price differences will appear because of the disparity between supply and demand. That means that there are fewer people buying the asset in comparison to whom that are selling -or vice versa- these disparities could occur several times in just one day, so you have the chance to buy the asset cheaper and sell it at a higher price almost immediately.
Of course, if the market becomes more competitive and the information about low prices is spread with more intensity, the supply and demand disparities decrease, so the arbitrage opportunities become rare. Because to earn profit, it is necessary to find price differences that overcome the operational costs.
So, if you want to do arbitrage, you need to know the following operational costs:
- Bank fees: Each bank has its own fees, in fact the fees can change depending on the amount to be transferred. So, you need to know the fees before starting to arbitrage.
- Exchange fee: This fee includes the cost of platform maintenance and changes according to the transaction, also includes the profit of the exchange. The P2P platform of El Dorado usually has lower fees in comparison with other exchanges, because it is leveraged on DeFi protocols and networks as Celo, so its operational costs aren’t so high.
How to arbitrage with El Dorado?
As we said before, the arbitrage is common in immature markets, but our P2P offers the possibility of arbitrage with cryptocurrencies with a mature market -as Bitcoin- and stablecoins like cUSD and cEUR. This is possible because you can choose the price to sell and buy the cryptocurrencies in the P2P marketplace.
Besides, the P2P marketplace has the option to buy and sell using a broad range of payment methods, so the supply and demand of the same asset can be different according to the available payment methods -yes, that includes fiat currencies-.
To illustrate how it works, we give you a detailed example:
Imagine that just exists 2 banks in your country, Bank A and Bank B, both are available as payment methods to buy Bitcoin at El Dorado P2P, but the Bank A is most popular, so most of the buy and sell orders placed by El Dorado users has transfers with the Bank A as payment method.
However, there are people who need to buy Bitcoin in El Dorado through transfers with Bank B, but due to the lack of popularity of Bank B there are few sell offers that accept Bank B as payment method. This represents an opportunity in the marketplace, because if you have accounts in both banks, you can create sell orders accepting Bank B transfers, and you can place the order with a high price of Bitcoin.
In summary, you buy BTC cheaper with Bank A and sell it at a higher price to the Bank B users, earning a profit for each transaction, which allows you to repeat the operation whenever you need it, because at the end of each operation you have more available money to buy Bitcoins.
Despite the fact that cUSD and cEUR are stablecoins, El dorado offers you the opportunity of arbitrage buying and selling a wide range of crypto currencies, because the stablecoin price is stable in comparison to its fiat pairs, but its price oscillate when yoy exchange it to volatile fiat currencies as Bolívares, Pesos and other latinoamerican currencies.
So, if you become a market maker you can create opportunities to arbitrage, placing buy and sell orders with any of the cryptocurrencies available in El Dorado. Thanks to these tools, El Dorado gives you the chance to create your own virtual exchange house, under your own conditions, without leaving your house, from the comfort of your phone and saving you from the boring bureaucratic procedures.
To make it possible, El Dorado allows their users to create ads on the public order book, so they can decide the exchange rate and payment methods to buy and sell cryptocurrencies. Also, the platform protects the security of its users when they are exchanging in the P2P marketplace, through a reputation and feedback users protocol, an escrow system and a conflict resolution center.
In order to improve your income through our platform, it is important to evaluate the reputation of each peer before proceeding with the order. And, although arbitrage is a good option to earn money as a market maker with minimal risk, that doesn’t mean that the operations are free of risk. One of the risks is linked with the high market volatility of the cryptocurrency’s prices, that means that while you are exchanging in the P2P marketplace the cryptocurrency price can drop, making it impossible to arbitrageur obtain a profit.
Another risk is linked to the P2P marketplace nature, that means that there exists a probability of non-compliance by your peers. However, in these cases, you can go to our conflict resolution center, where we take the actions to sanction the reprehensible behavior.
So, to minimize the losses you need a risk management plan, it allows you to manage occasional losses that respond to price variations and peer incompliance, without sacrificing the long term profitability .
This is another great option to earn money with El Dorado. Holding is the art of buying assets to sell it in the long term, the goal is accumulating all you can of that asset, for example, Bitcoin, so later you can sell it when it hits a higher price. When you become a holder you can enjoy a good profit in the future, but to succeed you definitely require patience.
Also, you have to study the asset, because the strategy is only profitable when the asset has a favorable projection beyond the price volatility. With El Dorado, you can buy Bitcoins using your local currency, so you can invest to hold a cryptocurrency that has proven to be profitable in the long term.
Sure, it is a focused long term strategy, so you can’t perceive profit quickly like doing arbitrage, and it’s hard to predict how much time you should hold or if the price is really going to live up to your expectations, but if you are wise you can earn good profits.
Also, before choosing to hold as an investing strategy, you have to consider the fact that it is very likely that the cryptocurrency faces price falls during your holding period. In those moments, the holder should keep his head cold and not sell, because the idea is to hold the cryptocurrency balance until it reaches the estimated price. In fact, you can buy more cryptos when the prices are low.
How to do holding with El Dorado?
Honestly, holding with El Dorado is too easy, thanks to the two possible options that the platform offers. First, you have the option of charging your wallet directly with cryptocurrencies that you already have in any other exchange or buying crypto with your debit or credit card.
The second option consists in going to El Dorado P2P marketplace to buy crypto to other peers with balance in the platform, this option is ideal to save money from the high fees of the transfers between exchanges.
Of course, if you want to earn money as soon as possible, doing hold is not the most suitable option. In that case, our recommendation is to explore the arbitrage option, which can be done between the same pair, different cryptocurrency pairs, and fiat currencies.
Do you like the idea of earning money with El Dorado? Nice! You can start signing in El Dorado. Just remember, no matter what method you choose, you always must consider risk management and patience as part of your strategy to achieve profitability in your investments.