LedgerX Introduced a Unique Bitcoin Option

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Trading and clearing platform LedgerX introduced a new type of bitcoin derivative, which is unique to the first cryptocurrency.

The new product is called LedgerX Halving Contract (LXHC) and is a binary option, the payment of which is fixed or equal to zero. The option is betting on the time when the bitcoin mining award will be halved.

Note that the reward decline occurs about once every four years, since the number of new bitcoins, which are rewarded by miners for mining a new block, is halved. The last time this happened in 2016 when the unit’s mining reward was reduced from 25 to 12.5 bitcoins.

The new derivative contract “will allow you to get a fixed payoff if the next halving block (#630,000) happens before a certain date and time. If the block is discovered after, the contract expires at zero.” Based on current network conditions, the date of the next halving block is estimated at May 25, 2020.

Usually binary options are perceived more like a game than a serious tool. In essence, this is a bet on “red or black.” However, representatives of the company noted that bitcoin is different from ordinary assets.

“…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.” LerdgerX representatives stressed.

Recall that in mid-January, the company announced the launch of the new LedgerX Volatility Index (LXVX), which will track the expected volatility of Bitcoin.

Author: Marko Vidrih

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