Why building your own cryptocurrency arbitrage scanner isn't always the best idea

We’re often asked: "Can you build a cryptocurrency arbitrage bot for us?" Most people asking this want a private scanner for their own use. The idea seems simple: pay once for custom development and use the software forever. On the surface, it sounds perfectly reasonable - why pay a monthly subscription and depend on a third-party service when you could own your own arbitrage scanner with no ongoing fees?

Ironically, projects like this are actually attractive to us. We have extensive experience building cryptocurrency arbitrage scanners, so creating a custom solution for a client is well within our capabilities and would be a profitable project for us. Even so, we usually advise people against taking this route.

Cryptocurrency arbitrage scanner development

What makes a good cryptocurrency arbitrage scanner? Копировать ссылку

Let's start by looking at what makes a good cryptocurrency arbitrage scanner and which features it must have to be truly effective. After all, the goal isn't just to browse attractive arbitrage opportunities - it's to make money from them, right?

1 Scanning speed

This is arguably the most important requirement: an arbitrage scanner must react to market price changes in real time. It should process incoming data instantly and display new arbitrage opportunities the moment they appear. A delay of even one or two seconds can already be a problem, yet many scanners are far slower. If your scanner shows outdated arbitrage opportunities, it's essentially useless. You won't be able to execute those trades - you'll only waste time checking opportunities that have already disappeared.

2 Reliability & Stability

The most profitable cryptocurrency arbitrage opportunities often appear during periods of high market volatility. To detect these spreads and notify you in time, your arbitrage scanner must run continuously, 24/7, without interruptions, crashes, or downtime. Achieving this requires a powerful and reliable server infrastructure.

3 Ease of use

A good arbitrage scanner should provide an intuitive interface with a wide range of settings, allowing you to quickly customize how arbitrage opportunities are displayed and filtered.

4 Important considerations

A good arbitrage scanner must account for many important factors, depending on the type of arbitrage. For example, it should calculate exchange trading fees, verify matching blockchain networks, check deposit and withdrawal availability for each coin, and much more. For cross-exchange cryptocurrency arbitrage, the scanner should calculate opportunities based on your actual trading capital and analyze the full order book instead of relying only on the best bid/ask prices - or even worse, the exchange's average market price. Ideally, it should also verify that the trading contracts match across exchanges. A scanner that ignores these and similar factors is simply ineffective. In that case, you might as well spend hours searching for arbitrage opportunities manually.

5 Filters

A cryptocurrency arbitrage scanner should let you filter opportunities based on a wide range of criteria, including supported coins, target profitability, deposit and withdrawal availability on specific exchanges, hedging support, and much more. Every type of arbitrage requires its own set of filters. The more comprehensive and flexible the filtering options, the more effective the scanner becomes.

Why building your own arbitrage scanner is a bad idea Копировать ссылку

Now that we've covered the key requirements of a high-quality cryptocurrency arbitrage scanner, let's look at why building your own solution is usually not only an extremely challenging task, but also a poor investment of both time and money.

1 High development costs

A high-quality arbitrage scanner is expensive to build. If you want your cryptocurrency arbitrage scanner to be fast, accurate, reliable, and capable of handling all the important details, you should be prepared to invest tens of thousands of dollars in development. These are the kinds of budgets quoted by professionals who specialize in building cryptocurrency arbitrage software. Even hiring a freelance developer can be costly, especially considering the complexity of such a project.

Cryptocurrency arbitrage scanner development costs
Screenshot from a software development company's website showing the estimated cost of building a cryptocurrency arbitrage scanner.

Let's take the lowest quoted development cost from one software company as an example - $10,000. Meanwhile, the average monthly subscription to a cryptocurrency arbitrage scanner is around $50 (and the price is usually much lower if you pay for several months in advance). At that rate, developing your own arbitrage scanner for personal use would only pay for itself after approximately 200 months.

Ideally, the developers working on such a project should not only be skilled software engineers but should also have at least a solid understanding of how cryptocurrency arbitrage works and the challenges involved in building an effective arbitrage scanner.

2 Expensive infrastructure

A high-quality arbitrage scanner maintains continuous connections to a large number of cryptocurrency exchanges and trading platforms, receiving and processing massive volumes of market data in real time. Doing this accurately and with minimal latency requires significant computing resources and a robust server infrastructure.

To keep your arbitrage scanner running 24/7, you can:

  • Deploy the software to a dedicated server (either yourself or with the help of a specialist). Unfortunately, a basic shared hosting plan costing just a few dollars per month won't be enough. To ensure stable, high-speed performance, you'll need a powerful server. If you want your arbitrage scanner to process market data in real time, server costs alone can easily reach hundreds of dollars per month.

Yes, if you've heard that we - or other cryptocurrency arbitrage scanner providers - spend a lot of money on servers, you might assume it's because we have a large number of users. In reality, that's not the case. The load generated by users is only a small part of the overall infrastructure costs.

  • Run the software locally on your own computer. In that case, you'll need a truly powerful (and expensive) machine. Keep in mind that your arbitrage scanner will only work while your computer is turned on, the software is running, and your internet connection remains stable.

3 Cryptocurrency exchange APIs are constantly changing

Cryptocurrency exchanges and trading platforms regularly update their APIs and introduce new rules. When you hire a developer to build an arbitrage scanner, they configure it to retrieve data using the API as it exists at that moment. Over time, however, every exchange modifies its API, and without timely code updates, parts of the scanner will gradually stop working. One month you may lose data from a particular exchange, the next month fee calculations might break, then another exchange may stop working, and so on. In other words, without ongoing maintenance from a developer, even a fully completed arbitrage scanner has a limited lifespan.

4 You'll need a dedicated developer

As we've already established, a cryptocurrency arbitrage scanner is not a one-time purchase. You'll need a developer who can:

  • Understand and maintain the codebase.
  • Implement regular updates.
  • Add and improve functionality.

If you hired a freelancer to build your scanner, there's no guarantee they'll even provide you with the source code. And even if they do, finding another developer who can understand and maintain someone else's code will likely be both difficult and expensive.

On top of that, a high-performance arbitrage scanner cannot realistically be built using common languages such as Python or PHP. These languages are generally too slow and resource-intensive for this type of real-time data processing. You'll need a more experienced developer working with technologies better suited for high-performance systems - and naturally, their services will cost significantly more.

5 You need a well-defined technical specification.

When you subscribe to a high-quality, ready-made solution, you're using software that has already been carefully designed, tested, and refined over time. It already includes the features traders actually need. The developers behind such products continuously collect feedback from a large community of cryptocurrency arbitrage traders -or, as in our case, actively use the software themselves -and constantly improve the product based on real-world experience.

For example, the algorithm behind our cryptocurrency arbitrage scanner bot for exchange-to-BestChange arbitrage has been completely rewritten multiple times to become one of the most effective solutions on the market. Its functionality has been tested, validated, and improved by numerous specialists. Achieving that level of quality requires years of development and extensive real-world testing.

If you decide to commission your own arbitrage scanner, you'll first need to explain to the developers exactly what you want them to build. That means creating a detailed technical specification: how the scanner should calculate arbitrage spreads, which fees and factors it should account for, and how every part of the system should work. To provide developers with the right requirements, you'll already need extensive knowledge of cryptocurrency arbitrage and its many technical nuances.

6 Security

With professional cryptocurrency arbitrage scanners (at least ours), you never have to share your exchange API keys. These scanners don't interact with your personal exchange accounts at all. The infrastructure is already in place, so you simply receive ready-to-use arbitrage opportunities without dealing with the technical side.

Exchange API keys are extremely sensitive credentials. Depending on their permissions, they can allow external software to perform virtually any action on your exchange account.

Any custom-built arbitrage scanner must connect to exchange APIs - there is simply no other reliable way to obtain real-time market data. (If someone tells you otherwise, it's best to avoid working with them.) To do this, you'll have to provide your personal exchange API keys. If you don't know exactly what the software is doing, haven't reviewed every line of its source code, and don't fully understand how your API keys are being used, you can never be completely certain that your funds won't eventually be put at risk.

Conclusion Копировать ссылку

Building a high-quality cryptocurrency arbitrage scanner is a complex, expensive, and in some cases even risky undertaking. Maintaining it is also costly: you'll need to pay not only for server infrastructure but also for ongoing development and support, otherwise the software will quickly become outdated and stop working reliably.

Even when you calculate only the minimum costs of developing and maintaining your own scanner, it becomes clear that using a proven, subscription-based cryptocurrency arbitrage scanner is far more cost-effective. It also saves you from countless technical challenges and ongoing maintenance. You simply use a tool that has already been built, tested, optimized, and is continuously maintained by professionals.

That said, finding an arbitrage scanner that truly meets all of the criteria discussed above is also no easy task. We'd like to invite you to try our products, trusted by cryptocurrency arbitrage traders and refined over years of real-world use:

Дата публикации: December 18, 2024
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