Arbitrage is the act of profitably exploiting the price difference between two markets for an asset or security. For example, if one bitcoin (BTC) sells for USD 20,000 on exchange ABC and USD 20,020 on exchange XYZ, an arbitrageur can profit by USD 20 for each BTC arbitraged between these exchanges. Arbitrage can be automated by using sophisticated computer systems and software to monitor prices and conduct high-volume trades that capitalize on even minor price differences. Arbitrage is a necessary financial mechanism for maintaining price consistency across exchanges and other financial markets.
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