The handling of the “normal” option and select it using the bitcoin blockchain? Impossible you might think, but the last month proved to be an experiment that succeeded.
At the option of 0.0202 bitcoin ($217 at the time of the deal, eds.) it is marketed in a smart contract on the bitcoin network and markets.
The option to trade on the bitcoin blockchain
The first is a sketch of how the current options trading in the huge lines in the lay of the land. The Standard & Poor’s Index is a good measure of what’s going on in the U.s. stock market.
It is a weighted index of the five hundred largest U.s. companies as measured by their market value. Author is credit rating agency Standard & Poor’s.
Traditional traders in options on the S&P 500 index symbol SPX, are still popular in spite of competition from exchange-traded funds (etfs), and futures contracts. Each day, there will still be hundreds of billions (!) dollars to to to.
All around the buying and selling of options, there is a whole industry of banks, consultants, agents, and other agents around them. Before an option is ‘settled’ is that the contract is between the hands of a few. This makes it a very expensive and slow process.
In the mean time before the option is used (‘settlement’) is in the course of two days.
The options on the bitcoin blockchain
That may not have otherwise thought of skew. as a startup, based in London, specializing in tools for the computer industry.
The CEO With Well of the skew. the light at Coindesk why he is on the S&P 500 options, wanted to trade using a bitcoin blockchain. In a serious experiment to be a serious club.
Wow, this is true as an ex-trader at the top a. JP Morgan, as an experienced person in the field. Skew. recently in the news because of two millions of dollars in venture capital to catch up with Silicon Valley VC Kleiner Perkins to name a few.
The test is carried out with a Computer, the Garage, part of the publicly traded Digital Garage of Japan.
These technicians have to have a smart contract program will be built to work with bitcoin base.
Why the bitcoin is?
Why bitcoin, and not, for example, ethereum, well-known for its smart contracts? Safety is important and bitcoin has the most secure network in the world.
In practical terms, Well the following steps are performed:
For a small fee (approx. 200 Pounds) has a Well bitcoin is bought
For this purpose, the 10 S&P 500 call spreads are bought to be a popular option
The seller’s Computer, the Garage, the buyer is skew at an agreed-upon price, using a smart contract,
The optiedeal happened to be in just a few minutes-the amount, dekkingsbedrag and the cut-off date
Skew. to pay for the option 0.0202 bitcoin ($217 at the time) from the smart contract,
Computer Garage is poured 0.04667 bitcoin as a cover, with the option to
At the cut-off date (20 september), you will use the smart contract would automatically be the price of the Intercontinental Exchange (ICE), known by Bakkt), the price of the S&P 500, to determine the
The trade turned out well for the skew. This was the conclusion 0.036 bitcoin ($365, at the time, paid for
Computer Garage was a 0.01 bitcoin to cover it back. (Skew later sent some of the money back in to the Computer a Garage, because it’s an experiment)
In the above figure, the data are stored on the bitcoin blockchain to be seen.
The “settlement” at the expiration of the option. Its simplicity makes it very appealing.
The series of letters and numbers in blue with the transaction ID.
On the left is in blue and the recipient address is in the white, and the total amount in BTC.
On the right hand side there is a blue line with the above, the prevailing party shall be (skew.) and below it, the address is on the losing side in this trade (Computer Company).
In yellow is the number of confirmations on the bitcoin blockchain, visible: 2068 qty. D
the confirmation of your card. 1, and pack. 2, and so on.
This was the purpose of the Well was successful, you have to look, or have an option to trade in bitcoin, and you can do that.
The advantages are: lower costs and a shorter settlement period (ca. 45 minutes instead of two hours).
The killerapp is a relatively low transactions costs.
Because, no matter how high the amount of the transaction is, whether it be 100 dollars or a billion dollars, and the fees are relatively low.
It can, in theory, also in the intermediaries such as financial advisors, and betaalproviders need.
However, it is still a long way off because of the major disadvantage of it is that the bitcoin network is therefore considerable need to scale up.
Also, each of the parties joined and served and that all of the data on an open blockchain is.
To sum up, for a fun experiment, and it is a very, very, very small steps to get to the options trading, cheaper, and more transparent.