A Bitcoin derivative, on the other hand, can allow people to trade contracts that follow the price of Bitcoin without having to actually own any Bitcoin.

What are bitcoin futures?

As described above – it is simply a contract or agreement between two parties to buy and sell BTC at a given price at a specific date in the future (hence the name).

However, neither party is required to actually own the underlying asset, in this case bitcoin. Instead, they simply settle the contract in US dollars or using stablecoins such as USDT. What distinguishes futures contracts from other derivatives is the specific settlement date.

How to invest in bitcoin futures?

Let’s look at an example of someone trading bitcoin futures. One of the first things a trader will have to decide on is the length of the contract. Exchanges offer several options such as weekly, bi-weekly, quarterly, etc. Let’s say you want to trade weekly BTC contracts and each contract is worth $1 when the price is 1 BTC = $50,000. This means that you will need 50,000 contracts to open a position worth 1 BTC. At this point, a trader can open a long position (betting on the price going up) or a short position (betting on the price going down). Whichever direction you choose, when you open a position, the exchange will essentially match you with someone going in the opposite direction. A week later, when the contracts are due to settle, one of the traders will have to pay the other.
If you decide to take a short position and a week later the price has fallen, you will make a profit. If the price went up, you will incur a loss.

What are bitcoin options?

Bitcoin options are also derivative contracts that follow the price of bitcoins, except that they don’t necessarily settle on their expiration date. The reason they are called options is because they give traders the ability or right to buy or sell at predetermined prices at certain dates in the future.

What are open-ended swaps / cryptocurrency contracts?

Perpetual bitcoin contracts are derivatives that, unlike futures or options, have no expiration or settlement date. Traders can keep their positions open as long as they want under certain conditions. One of them is that there must be a minimum amount of BTC ( margin ) in the account. Another important factor to consider is the funding amount. This is a unique mechanism that helps to tie the price of the perpetual contract to the price of Bitcoin.

Due to time constraints, the price of a futures contract will always be the same as the price of the underlying asset at the time of expiration. Since perpetual contracts do not expire, their prices can begin to deviate significantly from Bitcoin prices. The solution to this problem is for one side of traders to pay the opposite side.

Conclusions

Cryptocurrency trading offers several growth prospects for a good trader. The trick is to develop a strategy before starting crypto derivatives. A trader must analyze and understand the risks associated with derivatives trading before starting a trade. One thing is for sure, the cryptocurrency derivatives market is not where beginners should start.

The post Derivatives in the Crypto Market appeared first on ZFM_Coin.

With the crypto market stabilizing and growing rapidly, more investors from traditional financial markets may enter the crypto derivatives market. Exchanges with robust trading systems, high security standards and word of mouth can dominate the crypto derivatives market.

Bitget as a leader on the crypto derivatives platform

Launched in 2018, Bitget is now the dominant platform for cryptocurrency derivatives trading with many innovative products including bitcoin and other futures contracts. Our efforts have resulted in a huge customer base of 2 million users from 40 countries. In terms of scale, Bitget is truly the world’s largest digital copy trading exchange, with over 55,000 professional traders accumulating total revenue of $300 million and their 1.1 million subscribers accumulating over $350 million. Bitget is the largest cryptocurrency trading platform and is recognized by TokenInsight as the 3rd best crypto derivatives exchange in terms of liquidity.

Responsible use of leverage

Bitget users can conveniently maximize their profits with leverage. More volatile assets will have lower leverage levels to reduce traders’ exposure to extreme price fluctuations.

At the same time, we strictly require users to comply with our margin requirements and have introduced risk margins to help users better withstand liquidation risks.

Real-time basis

Another unique feature of Bitget is that profits and losses are calculated in real-time, which is our guarantee of a sophisticated and accurate data system. Traders will be able to manage their account according to the market, constantly improving their trading knowledge and skills.

The post The Cryptocurrency Derivatives Space appeared first on ZFM_Coin.

Today, utility tokens and tokenized securities are million-dollar concepts that startups around the world use in the crowdfunding process. But what do these terms mean? What is the difference between a utility token and a security token? Let’s take a closer look at these two concepts.

What is a token?

A token is a utility or asset issued by an enterprise. Often tokens are issued when a company launches an initial coin offering (ICO), which works almost like an initial public offering (IPO).

The difference between an ICO and an IPO is that in an IPO, users receive shares in exchange for the investment they make, while in an ICO they receive a token in exchange for their investment. There are two main types of tokens that can be found in the ICO space:

• Utility tokens (Utilitarian or utility tokens);
• Security tokens (Investment tokens or security tokens).

There is often confusion in determining the differences between security tokens and utility tokens. We will try to break down the difference between these two terms.

Utility Token

Utility or utility tokens are application coins or user tokens. They provide future access to products or services offered by a company. Hence, utility tokens are not created for investment.

Just as an electronics dealer can take orders for a video game that will be released in a few months, a project can create service tokens and sell digital coupons for services or products while they are still in development.

A good example is Filecoin, which raised $257 million dollars through token sales. These will allow users to access its decentralized cloud storage platform. Another example is also ERC20 in the Ethereum ecosystem.

Security Token

Security tokens are a digital asset whose value is determined by an externally traded asset. Consequently, these tokens are subject to federal laws and securities regulations. Failure to comply with these regulations can lead to serious consequences, including fines and potential disruption of project development.

On the other hand, security tokens can offer a wide range of applications if the project complies with all regulatory requirements. The most promising of these features is the ability to offer tokens as a digital representation of a company’s stock.

For example, Overstock recently announced that tZERO, one of its portfolio companies, will hold an ICO to fund the creation of a licensed security token trading platform. The tZERO tokens will be issued in accordance with SEC rules.

Key differences

The key difference between security tokens and utility tokens is the intended use and functionality. Security tokens are created as investments. Holders are paid dividends in the form of additional coins each time the token company makes a profit in the market.

Users who hold a security token also gain ownership of the company. Blockchain offers a platform that can be used to create a voting system. It allows investors to control the decision-making process of the company.

On the other hand, service tokens are not designed for their holders to control decision-making in a company. They simply allow users to interact with the company’s services. Both securities and service tokens can increase in value if the market rates rise.

The post Security Token vs Utility Token What is the Difference? appeared first on ZFM_Coin.

What is a token

In simple terms, a token is a digital certificate that guarantees the obligations of a company to its owner, analogous to shares on the stock exchange in the world of cryptocurrencies.

In the virtual world, a token is a digital conditional unit, the value of which is expressed in some asset. It is synchronized with a database built on blockchain technology, where all tokens are counted. Virtual tokens can be accessed only with an electronic signature and through a corresponding application.

Classification of tokens

Of course, there is no single classification at the moment, but to date tokens can be divided into the following types:

• Security tokens (investment tokens) – created to simplify the work of investors and are essentially shares of a company. They certify the right of ownership and give the opportunity to receive dividends;
• Utility tokens (service tokens) – designed to create virtual currency within a business, company, or any platform. Usually, utility tokens express points received for the fulfillment of company shares, they also include game currencies, etc;
• Asset-backed tokens (commodity tokens) are tokens backed by real-life liquid assets. These can be goods and services, as well as oil and gold. The company issuing commodity tokens is obliged to pay the owner the value of the token or send goods in exchange for tokens.

One of the common mistakes of novice crypto investors is buying tokens without taking into account the fact that a project can issue different types of tokens, both investment and utility tokens. Such variability can complicate an investment decision and eventually even make it unfavorable for the investor.

What can a token be backed by?

The only type of coin that can be backed by real value in currency or any commodity is a commodity token. When it is issued, a company equates the value of some service or commodity to a digital unit. For example, the owner of one commodity token can exchange it for a year’s fitness club membership. The guarantor in this situation is the company that created the personal token. It is she who is responsible for the legal purity of transactions.

Tokenization of assets

Tokenization is the transformation of an asset into a digital unit. Simply put, this process is the transformation of a real-world asset into a digital asset in the form of one conditional unit, the information about which is stored in the blockchain. This transformation allows the token owner to interact with real-world assets much more securely and quickly.

Pros and cons of tokenization

Tokenization has its own advantages:

• Improved and faster trading exchange;
• Secure coin storage and transfers between owners;
• Ability to trade without guarantors or intermediaries, as all transfers are regulated through smart contracts;
• Empowerment of infrastructure and trade exchange in general;
• Significant simplification of work with sellers of goods or services by integrating the system into special mobile applications.
• Increased database security, which is possible due to thorough verification of incoming information;
• High-speed processing of transactions due to a large number of independent servers;
• Creation of secure auditing.

Nevertheless, despite all the above advantages, tokenization can become a problem. There are the following reasons for this:

• There is a risk of loss or theft of user identities due to cyberattacks;
• Ensuring data anonymity in a public blockchain is a nearly impossible task;
• It is difficult to expand the system in decentralized coin operations due to transaction limits.

What is the difference between tokens and cryptocurrency?

As you know, cryptocurrency is managed in a decentralized manner. Simply put, a certain algorithm is responsible for the functioning of coins, which cannot be regulated. Tokens, unlike cryptocurrency, can be both decentralized currency and centralized. In the latter case, a single company, which is its creator, is responsible for managing the coin. In the same organization, all transactions take place, transactions are carried out and all information related to the accounting of coins is processed.

The price of a digital unit may depend on the balance of supply and demand, as well as on the rules of issue and other factors. It is also worth noting the fact that tokens are not backed by a unique blockchain, unlike cryptocurrencies.

Is it worth making your own token?

Whether or not to convert your product into a token can be a serious question for a manufacturer. Whatever the advantages, you should also think about the possible consequences.

But connecting crypto payment acceptance to an online store will definitely help attract progressive customers who are ready to pay for your goods with cryptocurrency. For any questions related to the connection of our cryptoprocessing, you can contact our support!

The post What Tokens Are and What Their Role Is in the Blockchain System appeared first on ZFM_Coin.