The cryptocurrency market has expanded into a diverse ecosystem of over 2,150 coins and tokens, with each of them concentrating on a specific type of application and use case that is built using the blockchain technology. Though the substructure supporting the cryptocurrency world is still in its early stages, various conditions would warrant greater exposure and awareness of cryptocurrencies. One such progress is the introduction of cryptocurrency derivatives, which is a brand-new line of financial products. The most common form of cryptocurrency derivatives at the moment is Bitcoin futures, which received a mixed reaction among the community.
Some crypto enthusiasts consider that the introduction of derivatives will help stabilize the market and ensure better execution of orders, thereby civilizing the nature of trade. They are confident that derivatives will bring liquidity to the market and increase the volume of business. Cryptocurrency’s very gray regulation zone also plays to the advantage of the derivatives market, as most over-the-counter derivative products are unregulated. In other words, this is familiar territory for over-the-counter purveyors of more traditional derivative products. What original products those can be, too — at least one provider offers derivatives based on the weather.
What are Crypto Derivatives?
A derivative is simply a financial contract between two or more parties that derives its value from an underlying asset, in this case, cryptocurrencies. More specifically, it is an agreement to buy or sell a particular asset — be it stocks or cryptocurrencies — at a pre-determined price and a specified time in the future. Derivatives do not have inherent or direct value by themselves; the cost of a derivative contract is based on the expected future price movements of the underlying cryptocurrency.
• Futures: A financial agreement where a buyer has an obligation for a buyer to purchase an asset or a seller to sell an asset at a fixed price and a pre-determined future price. A crypto trading future contracting refers to a process, in which trader sets a pre-determined amount to be sold or bought sometime in the future. The contract is used when an investor is sure of his or her analysis of future trends in the market. It is one of the more sophisticated instruments that are rare to find in the crypto world. This issue is mainly due to high fluctuations in the value of coins.
• Swaps: A swap is an arrangement between 2 parties to exchange a series of cash flows in the future, usually based on interest-bearing instruments such as loans, bonds or notes as the underlying asset. The most common form of swaps is interest swaps, which involves the exchange of a future stream of fixed interest rate payments for a stream of floating rate payments between 2 different counter-parties.
- Options: A financial contract is where a buyer has the right to purchase an asset or a seller to sell an asset at a pre-determined price by a specific timeline. Due to the infancy of the cryptocurrency derivatives market, there are only a few derivatives products available for the public at the moment. The most common cryptocurrency derivatives are Bitcoin futures and options, because Bitcoin controls over 50% of the entire cryptocurrency market capitalization, making it the most significant and most-traded coin around. A short position means that we believe that a drop in the price of Bitcoin will take place, and we want to profit trading against Bitcoin. Technically, short positions work by selling the asset first, and then later buying it. You don’t have to worry; the exchanges do this automatically for us. The second role for shorting Bitcoin is the option to hedge your portfolio. For example, if your collection consists of five Bitcoin and we want to hedge against the risk of Bitcoin’s decline, a 10X leveraged short position could be opened, and it would be equivalent to 40% of our Bitcoin portfolio. To open the position the amount required is only a tenth of it (10 times leverage). That means that we need to hold 0.2 Bitcoin. So, our Bitcoins are stored securely in cold wallets. However, don’t forget the risk of trading with leverage (especially the liquidation price of any position).
The Future Of Financial Investments — Geco.one
Geco.one is the world’s first global PAMM platform enabling trading in cryptocurrencies with futures trading, long and short positions on crypto assets and using financial leverage. GECO.ONE is a transfer of a proven solution from a traditional Forex market to the Cryptocurrency market.
A significant number of additional tools is made available for all users of Geco.one PAMM trading platform. Features like marginal trading, funding from multiple investors, complex PAMM account merging options to name a few, making it the most comprehensive set of tools for trading cryptocurrencies on various exchanges. Experts recognise the magnitude of possibilities and use Geco.one regularly. Investors gain all the data necessary to be able to assess the traders and managers at the tips of their fingers. Features like overall score, consistency, style of trading are just a few of the broad spectrum of the possible analysing mechanism.
The PAMM trader provides the investors with the resume, investment profile, previous investors ratings and comments about the trader. Investors are at liberty, to have more than one trader to manage their investments, allocating proportions of their investment to the traders as they deem fit. Although there might be a minimum amount of money an investor can start with, there is no limit to the maximum of investment. The PAMM trader act as an independent guarantor, to make sure that the obligations on the part of the traders and the investor get fulfilled accordingly. A trader must have at least a certain amount of personal investment with the PAMM firm. A trader can manage and receive profit from their account and investors accounts. Traders don’t have access to investors’ money. They cannot withdraw it at any point. However, the profit made after a trading session is shared between
the trader and the investor using the designated percentage share stated from the onset by the PAMM trader.
Imagine giving your money to a trader, so he can make a profit for you when he makes one for himself — introducing cryptocurrency PAMM accounts by Geco.one.
Official website: https://geco.one
White paper: https://geco.one/static/files/whitepaper.pdf
Block Explorer Address: 0xe304283C3e60Cefaf7eA514007Cf4E8fdC3d869d