Why Crypto Is the Future of Futures Trading
There are several reasons financial institutions are able to post huge profits by influencing the exchange rates relied upon by the international community. One that clearly stands out has everything to do with the development and triumph of futures trading.
Futures trading can best be described as a strategy that deals with the management of risk. It revolves around contracts that are to be executed at a given future date, and which will be guided by a price agreed upon by all parties involved.
Statistics released by the FIA (Futures Industry Association) indicate that by the close of 2017, the value of the total number of futures and options that had been traded stood at an impressive $33.6 trillion.
The futures industry continues to grow in leaps and bounds especially now that the markets are becoming more easily accessible to virtually anyone. In fact, the futures industry is so lucrative that even "respectable" financial institutions are risking damaging their reputation by engaging in massive fraud.
Traditional Financial Institutions and Market Manipulation
CFTC carried out extensive scrutiny of JPMorgan Chase & Co.’s operations spanning five years. The results indicated that the firm had been submitting doctored financial reports for years.
Their motive was to influence the interest rates used by the United States Dollar International Swaps. The CFTC eventually slapped JPMorgan Chase & Co. with a $65 million fine after proof emerged that it was engaging in shady practices in a swap market worth more than $300 trillion.
In what appears to be a widespread practice in the financial industry, Citibank also found themselves on the receiving end of the CFTC investigations after being fined approximately $100 million. The fine was issued after the Attorney General's Office conducted extensive surveys in all the 42 states where the Citibank group has operational offices.
Another company that has found itself in the crosshairs of numerous investigations for similar practices is Goldman Sachs. In the case of Goldman Sachs, they were accused of attempting to influence and/or control the operations at the ISDAFix. For their actions, they were forced to pay a fine totaling $125 million.
If you were to list industries that require a complete overhaul of their ethics departments, financial institutions would top that list.
Is Cryptocurrency the Solution?
Unlike traditional institutions that are primarily motivated by their bottom line, cryptocurrency is all about transparency and expediency, two attributes that make it a major contender for futures trading.
Several crypto companies have already ventured into the futures industry with notable success. BitMEX was the first cryptocurrency derivatives exchange. The company was launched in 2014 with the promise of faster, cheaper, and more secure trades and transactions. It currently registers an average daily trading volume of $5 billion. This figure is expected to appreciate steadily over time.
Another notable player in this emerging space is CME Group Inc., one of the world’s largest futures exchanges. The platform set the pace for other upcoming players when it listed Bitcoin futures contracts in December 2017. Other exchanges like OKEx also offer derivatives and report high trading volume.
Then there's the hotly anticipated entrance of ICE Markets' Bakkt into the market in January 2019, intended to be a regulated and open ecosystem for global assets. Their flagship product is a US-based futures exchange and clear-house plan for daily Bitcoin contracts with physical warehousing--and their target is institutional investors and traders.
Although Bakkt's launch has been delayed already from its anticipated November start, according to the company in a tweet at the end of last month, US traders won't have to wait too much longer. Subject to regulatory approval (four words that have a big meaning in crypto), the company will be open for business on January 24.
Question: When will trading and warehousing begin?
Answer: We expect the contract to launch on January 24, 2019, subject to regulatory approval. We’ll continue to update you on our progress and milestones.
— Bakkt (@Bakkt) November 27, 2018
That said, futures traders are still waiting for an improved user experience, greater transparency, reduced slippage, and trading without commissions. And Bakkt won't provide the experience that retail traders are looking for, not right away, at least.
Digitex Futures – A Revolution in Crypto Futures Exchanges
Offering the best of centralized and decentralized features, Digitex Futures is commission-free and non-custodial. This means that traders can place and scratch trades without losing out on profit from a high-speed trading interface--and they don’t have to trust the exchange with their funds.
When Digitex launches next month, futures trading in crypto will move to a whole new level. Let’s recap some of the highlights.
Digitex Futures has a simple, one-click ladder trading interface that is easy to use. The interface displays live bids and offers in real time. Trading is also simple – you can do it with the click of a button. It is also instant as it offers the speed of centralized networks, so you don’t have to worry about the inconvenient delays associated with wholly-decentralized futures exchanges.
Most people don’t know it but they don’t own any assets they purchase on centralized futures exchanges. These assets are in the custody of a third party, and the custodian can freeze them, delay their transaction, or even confiscate them without consent.
Account balances on Digitex Futures are maintained by smart contracts instead of a third party. This means that only you can have access to your assets using your private key. As such, you don’t have to worry about your assets getting mismanaged, stolen, or frozen.
Digitex Futures Commission-Free Tokenomics
The most popular thing about Digitex Futures is that trading is commission-free. Digitex Futures has its own native currency: the DGTX token. Traders on this platform need these tokens to place trades and exchanges. This creates a constant demand for the token and allows Digitex to cover the costs of trading.
Interestingly, this also creates an opportunity for traders to make greater profits through their DGTX tokens. Their value is expected to appreciate over time and already made saw a price rise 500%+ this year, even while ETH was dropping over 90 percent at the same time. So early investors and Digitex clients stand to profit from this--both traders and token holders.
The futures industry is undoubtedly lucrative and new opportunities to develop the best futures trading strategies are coming up all the time. Now traders can take advantage of them in a much more efficient, transparent, and convenient way, it seems inevitable that the future of futures trading is in crypto.