The regulated crypto trading platform that LedgerX has released a derivative contract that is a pure resemblance to bitcoin according to the official blog post that was published yesterday and it reached our bitcoin news today.
The new halving contract LXHC is actually a binary option where every payoff is either a fixed monetary amount or basically zero which settles up to the next time when Bitcoin halves.
Bitcoin halving is a process that happens almost every four years where the amount of new Bitcoin created and thus earned by the miners will be divided in half. The last time this happened was in 2016 when the reward came down to 12.5 BTC and the next halving process is expected to happen in 2020 by the end of May.
LedgerX explains that this new product will allow the users to get a fixed payoff if in any case, the next halving happens before a pre-set date and time. If the block is discovered after the halving process, the contract will come down to zero.
Binary options are seen as risky for some options because you cannot really choose much but according to the blog post, LedgerX pointed out:
“…imagine you are an oil producer such as Exxon Mobile and know that one day in 2020, the number of barrels of oil you extract will go down by half, forever. But you’re not certain which date that will be. This would materially impact planning for investment and operations. Bitcoin miners face this exact risk approximately every four years for the block reward that they earn.”
The new product of LedgerX is licensed by the United States Commodities Futures Trading Commission and aims to simplify the options trading.
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