What Is a Market Maker?
A market maker is a market participant who commits to buying and selling of any crypto currency or digital asset, at a specified price, at all times. Their role is to create a fair, orderly market. Market makers are traders that compete amongst each other for order flow and, in the process, create a more liquid market.
This is good for you, because when you place a market order to sell your crypto currency, the market maker will actually purchase the units from you, even if he doesn't have a seller lined up. In doing so, they are literally "making a market". Without market makers, it would take considerably longer for buyers and sellers to be matched up with one another, reducing liquidity and potentially increasing trading costs as it became more difficult to enter or exit positions.
How Do Market Makers Make Money?
Market makers must be compensated for the risk they take. What if he buys your bitcoins then bitcoin price begins to fall before a willing buyer has purchased the currency? To prevent this, the market maker maintains a spread on each currency he covers.
Using our previous example, the market maker may purchase your bitcoins from you for $4000 each (the ask price) and then offer to sell them to a buyer at $4001 (the bid price). The difference between the ask and bid price is only $1, but by trading thousands of units a day, he's managed to pocket a significant chunk of change to offset his risk.