Going by a blog post published on the 5th of February LedgerX, a trading and clearing platform regulated by the United States, has launched a new kind on Bitcoin derivative contract.
Wagering On The Next Halving Event
The Bitcoin derivative contract, dubbed the LXHC (LedgerX Halving Contract) constitutes a binary option which dictates that the amount of payoff to be earned can either be one that is fixed or can be nothing. This binary option is to be settled on the next estimated date of the Bitcoin halving event.
The halving event is an event that is carried out once in every four year period which results in the rewards for mining being cut in half and the number of Bitcoin mined being reduced by half. The last halving event was held in 2016 and saw the mining reward reduce from 25BTC to 12.5BTC.
LedgerX has stated that the derivative contract will enable users earn a fixed payoff in the event that the next halving takes place before a stated date and time. In the event that the halving takes place after the stated date and time, there will be no payoff i.e. contract expires. Going by the current conditions, the next halving event is expected to take place on the 25th of May, 2020. The company will be offering five contracts starting from 27th of March, the riskiest contract, to the 31st of June, the safest contract.
The Bitcoin Price Volatility Index
Binary options are usually seen as wagering due to the fact that the investor is essentially placing an all or nothing bet. LedgerX has however pointed out that its binary option is unique in that it includes a binary economic risk. In its post LedgerX explains that Bitcoin miners are faced with the same risk as would be faced by oil producers should they know that the amount of oil they are able to extract will reduce by half within a stipulated period of time that is not certain. This eventuality would affect the operations and investment planning, a similar risk faced by miners.
Last month the company released the price volatility index for Bitcoin. The new price volatility index was released as the LedgerX Volatility Index (LXVX). LedgerX explained that the LXVX took into consideration the fear and uncertainty experienced in the Crypto market and can therefore be regarded as a Bitcoin fear index. LedgerX went on to explain the LXVX was a Bitcoin fear index much in the same way as VIX (CBOE Volatility Index) was considered a fear index for the stock market by commentators.
LedgerX Expanding Product Portfolio
LedgerX unveiled its BTC savings product around mid-last year, in May. The product, which the company has received a license for from the United States Commodities Future Trading Commission, has reportedly been created to make the trading of Bitcoin much simpler. This product can purportedly make trading in Bitcoin as simple as pointing and clicking and in this way allow less experienced traders to enjoy a premium price for the holdings they have.