The American Exchange of Cryptocurrency Derivatives LedgerX presented a fundamentally new type of derivative contract, the payment on which will depend on the time of the next halving (halving) rewards to miners in the Bitcoin network.

Announcing the world's first #Bitcoin native derivative. Read more on the @ledgerx blog: https://t.co/chqf0OOxgd

– LedgerX (@ledgerx) February 6, 2019

The new product is called LedgerX Halving Contract (LXHC) and is a binary option, which is calculated on the basis of the unit on which halving will take place.

As explained in LedgerX, this is not about the evolution of derivative solutions, but rather about improvisation with some already existing ideas, since swaps, options and futures are all already familiar to the traditional financial world.

“This contract will allow you to receive a fixed payment if the next halving unit (# 630,000) is found before the due date and time. If the block is found later, the value of the contract at the time of its expiration will be zero, ”the message from the New York company said.

As is known, halving in the Bitcoin network occurs every four years, and the next such event, according to Bitcoin Block Reward Halving Countdown , should occur on May 25, 2020. This, however, the approximate calculations – the exact time of finding the block # 630,000, on which halving will take place, depends on a combination of such factors as the network hashrate and the complexity of mining . The previous halving, after which the miner’s reward decreased from 25 BTC to the current 12.5 BTC, took place in 2016 .

“Binary options are traditionally associated with gambling. But most financial products behave in a similar way – the stock price, the price of oil, the temperature of the weather, etc. Binary options are usually based on the right or wrong choice, whether the team won the Super Bowl or lost. Wall Street managers often avoid binary options, but Bitcoin is unique in that its underlying fundamental risks are binary. For example, Exxon Mobile, an oil producer, knows that once, in 2020, the number of barrels of oil produced will be permanently reduced exactly twice. But you do not know which day it will happen, although the event will significantly affect investment planning and trading. Bitcoin miners face similar risks every four years, when the number of new bitcoins with which miners are rewarded for mining a new block is halved , ”added LedgerX.

In 2017, LedgerX became the first private company to receive official permission from the US Commodity Futures Trading Commission (CFTC) to launch a stock exchange and clearing center for trading cryptocurrency options and derivatives.

In January of this year, the company launched the LedgerX Volatility Index (LXVX), which tracks the expected bitcoin volatility.

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