Part 2/8:
At its core, arbitrage involves buying cryptocurrency on one exchange at a lower price and selling it on another exchange where the price is higher. While this sounds straightforward, a significant challenge arises from the price volatility in the cryptocurrency market. By the time a trader places an order on one exchange, the price may drastically change by the time they attempt to execute a sale on another, leading to potential losses.
To circumvent this risk, Gregory introduces a revolutionary concept: an arbitrage bot that operates without the risk of losing money, leveraging mathematical certainty as its foundation. The key to this strategy lies in the use of smart contracts and flash loans, which he elaborates on throughout the video.