Opportunistic traders have been engaging in arbitrage — and attempting to see whether they can make a fast buck by accessing a more generous rate on exchanges.
El Salvador has announced new plans to crack down on those who are exploiting the Chivo wallet to make a quick profit on Bitcoin.
The government’s official crypto app offers a price freeze feature that ensures Bitcoin’s exchange rate remains static for one minute until a transaction is completed.
Unfortunately, opportunistic traders have been taking this opportunity to engage in arbitrage — and attempting to see whether they can make a fast buck by accessing a more generous rate on exchanges.
Although this practice — which is commonly known as scalping — is legal, Chivo fears this could result in “endless” profits, describing it as “fraud.”
What’s Going to Change
It appears that Chivo has devised a relatively simple solution to get around this problem.
From now on, the app’s users will be unable to see the rate where Bitcoin’s price has been frozen — denying scalpers the intelligence they need to hunt for arbitrage opportunities.
In the future, conversions will take place in real time, meaning that prices won’t be frozen at all.
