What is Bitcoin Futures? Definition, Explanation, Guide.

Everyone is asking the question that what are bitcoin futures, should I invest in bitcoin futures? how do bitcoin futures work? what does it mean for the bitcoin price? How does it affect the blockchain technology and cryptocurrencies? and where can you trade bitcoin futures. I will go into answering all of these questions but before I go into that, let’s start from the beginning.

Before understanding Bitcoin Futures it is imperative to understand what are Futures and what do they mean in finance. Understanding ‘Futures’ is understanding half of the ‘Bitcoin Futures’.

What are Futures?

Futures are contracts that puts buyer and seller under the obligation that buyer will buy and seller will sell the committed asset, commodity or financial instrument at a date and price that was decided in advance regardless of what is the actual price.

Futures contracts are negotiated and traded on futures exchanges.

Does dealing in Futures mean making lot of money?

If you have a critical piece of information then you maybe able to use it to your advantage of earning exponential profit but Futures are not always necessarily used for gaining profit; instead, it is used in order to minimize risk and protect individuals and institutions from loss caused by change in prices.

How does a futures contract work

There are two types of positions you can take in futures, Short and Long. Short means to sell and Long means to buy.

If you opt to get into long then you’d need to buy the chosen asset at a specific price upon contract expiry.

If you opt to get into short then you’d need to sell the chosen asset at a set price upon contract expiry.

An easy example is about a real estate developer who uses lot of cement for its projects. Suppose the current price of cement per Kg is $1. If the speculation is that cement prices will increase for next 5 months before getting stable then in this case the real estate developer can buy 5 months futures contract of 10000 kg cement at current price. This contract is worth $10,000.
When the contract expires after 5 months and cement per Kg is $1.5 then the real estate developer have saved $5000.

This contract protected both the seller and the buyer. Cement vendor is protected even if the prices fall because he will still be selling at previous higher price and if the price goes up the real estate developer will still be paying the previous price.

What are Bitcoin Futures?

As you have learned so far that futures can be used for physical commodity as well as financial assets and now it can be done for electronic assets like bitcoins also.

In bitcoin futures, the contract is based around the price of bitcoin and speculators can speculate what the price will be in future.

bitcoin futures can be traded on some regulated exchanges even if the bitcoin is not regulated.

How does bitcoin futures work?

Bitcoin futures follow the same principles of traditional futures.

With bitcoin futures, investor can take two position: long or short.

Imagine you own a bitcoin that is currently worth $20,000 and you think price may go down soon so you sold the bitcoin futures contract at $20,000 Suppose the price goes below $16,000 and the bitcoin futures contract have the same price then you can buy back the contract and earn $4000.

Where to trade bitcoin futures?

Chicago Mercantile Exchange (CME)

What is BridgeProtocol (bridgeprotocol.io)(IAM token)?

You must have heard about Bridge Protocol ICO. In this post I will try to explain what is BridgeProtocol and how it works and whether it fulfils any useful purpose.

First of all this is not about Bridge Protocol Data Unit or BPDU that is used in networking.

What is the mission of Bridge Protocol?
It is stated on the website that Bridge’s mission is to assist Initial Coin Offerings (ICOs) by creating avenues and methods for safe, legal and compliant ICOs.

Bridge wants to create an open, distributed network of validators that regulates the behaviour of participants for creating safe and high assurance environment.

Bridge will facilitate and create methods to implement business processes that comply with existing standards and regulations. Said system will maintain a private blockchain to process assets securely using smart contracts that no third party can influence based on the laws of regulatory body of nation for whom the solution is being built. This system will be composed of trusted virtual machines that will enable user accessible functions for enterprise grade business operations.

What’s the connection with ICO and ProjectICO?
As you have read and noticed, entrepreneurs from all over the World has been raising billions of dollars through ICO or tokens which outran conventional seed funding and venture capitalists funding. In some cases, like it happens with any other business, some people lied and committed fraud by not releasing the mentioned product and not keeping up with the promises, this caused losses to some people and bring in regulatory authorities to monitor it and regulate it.

Legal experts in this area charge $125,000 to $250,000 for corporate structuring and general advisory. Bridge believes this has created unnecessary cost barriers for genuine candidates who want to create useful product but have limited resources.

To follow Regulations like Know-your-customer (KYC) costs customers above $30,000 if done by traditional means whereas most people doing ICO now from their home save this highly confidential data in their personal PC and many doesn’t provide no protection whatsoever.

Until now, companies and individuals have been using traditional business models and systems in this space without tapping the blockchain potential has to reduce cost and protecting customers by utilizing it.

Bridge have consulting experience with ProjectICO that told them about the financial and legal obstacles genuine ICOs has to face.

What is Bridge Protocol?
The Bridge Protocol Corporation aims to create a microservices architecture for business applications that will run on the blockchain.

The Corporation will own and run a certificate authority on Blockchain. Protocol will provide services such as identification.

Bridge Protocol have chosen NEO blockchain due to its existing model and potential. It will help Bridge in creating a Public Key Infrastructure (PKI) for its userbase.

The Bridge Identity Management System (bIMS) will issue certificates that adhere to regulations, standard, model while providing extensions (application policies, key usage, etc.) so the application logic can be developed and utilized on Bridge’s Blockchain.

These certificates will be issued to real persons, machines and “virtual persons.”

The Bridge Protocol uses Bring-Your-Own-Key (BYOK) interface to verify user ownership of keys, data, and processes.

Due to Bridge’s focus on commercial off-the-shelf (COTS) hardware encryption
modules help mitigating costs and eases the process for any player big or small to realize the potential of their idea.

What is the distribution mechanism of Bridge Protocol?
Token used by Bridge is called IAM. It uses NEP-5 created from NEO smart contract.

Only 1 billion tokens will be created. First portion of 500 million will be distributed through crowdfunding while remaining 500 million will be managed by Bridge Corporation to support development and maintenance.

Is Bridge Protocol a promising project?
I think it is a project with huge potential especially by looking at the state and potential of blockchain industry it will not be difficult to see many newcomers with great ideas trying to tap using ICO. A system like Bridge which eases the whole life cycle of ICO is indeed a very promising idea.

Is Bridge Protocol a good idea to invest in?
Do your own due-diligence. I would say, if Bridge does what it says it will do then I think it is definitely worth investing in.

10 Decentralized Cryptocurrency Exchange list you can use to trade

Lot of traditional cryptocurrency exchanges have been hacked in the past. Are you looking for better alternatives where your investment is safer?

Recently a big wave of decentralized cryptocurrency exchanges have come across. Will this wave sweep the centralized exchanges away from the mainstream? Well, one day it might will – if it can be proven as more secure than conventional centralized exchanges and as reliable and easy as centralized exchanges then that day is not far when everyone will be using decentralized cryptocurrency exchanges.

We use Decentralized currency on centralized websites – sounds like an oxymoron, right? Decentralized websites, at the moment, might not be as easy as it’s counterpart because if they were then whole system how things on internet work now will change. Decentralized technologies are taking small steps but will learn to fly soon. It’s client/server model vs P2P.

Let’s wait and see how this journey goes. Meanwhile, try to get hands on experience on these decentralized cryptocurrency exchanges, if you got the hang of it then you’d spend more time doing trading on de-ex (decentralized exchanges) then ce-ex(centralized exchanges). Some people might find decentralized exchanges difficult to work with so it will take some time to work around these exchanges.

These are the decentralized exchanges that are worth trying. Do try these exchanges and let our readers know how it is so they can learn from your valuable experience.

1- Etherdelta
Etherdelta probably have the most number of cryptocurrencies available. More than 300 cryptocurrencies

It has a total volume of above 1,135 BTC which is pretty good.

2- Crypto-bridge.org
The CryptoBridge exchange with its graphene can process more than 100,000 transactions per second with average confirmation time of only 3 seconds.

Cryptobridge have more than 68 coins listed and have volume of 140 BTC.

3- Wavesplatform.com
Waves decentralized exchange (DEX) is still in the beta phase but it has a pretty neat user interface that is completely usable. Waves also have a cryptocurrency. Their DEX is built using waves blockchain. Here, you can trade using BTC/ETC/ZCL/LTC and many other coins.

On Waves DEX, the volume is usually above 1500 BTC which is pretty good for DEX.

Waves have 72 cryptocurrencies listed on it.

4- OpenLedger.io
OpenLedger uses BitShare’s graphene technology to provide its services

Here, you can trade more than 120 cryptocurrencies and the total volume is more than 300 BTC.

5- Bisq(BitSquare)
Bisq has 12 cryptos listed and has volume of 1.92 BTC.

6- Stellar DEX
Stellar’s DEX have 12 cryptocurrencies with a total volume of 123 BTC.

7- Bancor
Bancor have 26 coins listed with daily total volume of more than 200 BTC.

8- BarterDEX
It has more than 12 coins listed and total volume is 0.52 BTC.
Counterparty DEX
It has 8 coins listed and liquidity is pretty low at o.56 BTC.
9- Altcoin.io (LAUNCHING EARLY 2018)

10- district0x (coming soon)

What is a decentralized cryptocurrency exchange?

The meaning of decentralized is “to move the control of an organization or government from a single authority to multiple authorities.

To understand decentralization in Technology is different from decentralization in ways how government or an organization operates.

Decentralized means something that is not centralized. E.g. anything that is controlled by single individual or authority is considered centralized, think of it like a small organization or a company with CEO. All the important decisions are made by one individual. But, if organization was decentralized then according to the experience and expertise of each individual they will be able to decide the fate of the company.

There is no common definition of decentralization as more and more research has been going on in this field. People are more used to centralized way of doing things.

All major cryptoexchanges are centralized. Centralized exchanges have single point of failure, meaning if one server is hacked then personal information of all the account holders is compromised. As you know what happened to Mt.Gox and many other exchanges – all these hacked exchanges were based on centralized model.

Bitcoin was the first decentralized cryptocurrency that was held electronically and that allowed people to transfer value between them without trusting the third party. But, problem comes when people use decentralized currency on centralized exchanges. Both of these models totally differ from each other.

Even though centralized exchanges are easy to use and offers advanced options like placing orders in advance, margin trading etc but with this ease and advance options comes security issues as happened in the past. Even though some exchanges are better protected than other but nobody can give you guarantee that your data is safe with them.

So, the question is how to trade cryptocurrency with interested buyers and sellers without putting all your savings at risk? The answer lies in decentralized exchanges.

What is a decentralized cryptocurrency exchange?
Decentralization is about distributing functions and powers to many instead of giving it to any one. On decentralized exchanges your personal information, wallet information, funds etc does not save with a third party.

Decentralized exchange is based on peer-to-peer(p2p) model. The trade doesn’t go through central server before being processed. As buyer’s and seller’s requirements are met the order is executed.

On decentralized exchange the order is processed between two parties without involving any third party.

What are the benefits of decentralized cryptocurrency exchange?

One big benefit of the decentarlized exchanges that centralized exchanges cannot offer is the trustless nature of decentralization where there is no need to trust any party with your personal information such as name, date of birth, bank account, wallet info, private keys etc

You are not held at the will and honesty of the exchange.

The hosting of a decentralized exchange is p2p meaning every node, computer or participant is helping to maintain maximum uptime to keep the system online and run flawlessly.

Centralized = Exchange controls your funds, private keys
Centralized = Exchange have your personal info
Centralized = Server Downtime
Centralized = Single point of failure
Centralized = Can be hacked

Decentralized = You control your funds and private keys
Decentralized = You maintain anonymity
Decentralized = Not prone to hacking
Decentralized = No downtime. Maximum uptime

What are the disadvantages of decentralized exchanges?
At the moment, If security and protection of personal identity is a plus of decentarlized exchanges then centralized exchanges have other plus or advantages.

Centralized exchanges offer ease of use, advanced options like margin trading, stop loss, lending etc while decentralized exchanges are limited to basic options like setting order to buy or sell. In the decentralized exchange you need to be online for your order to be processed but with centralized this can be processed even when you are not online.

Centralized exchanges have higher liquidity meaning there will always be someone to buy your coins and somebody you can buy coins from.

In short,
Centralized = Ease of use
Centralized = Advanced Options
Centralized = High liquidity

Decentralized = Difficult in use
Decentralized = Basic features
Decentralized = Low liquidity

DAG Cryptocurrencies Comparison (Byteball vs IOTA vs RaiBlocks)

Do you know DAG or Directed Acyclic Graph is the upcoming technology that have the potential to disrupt the existing blockchain based cryptocurrencies? If you are not paying attention to this, then I guess you should start learning more about it so you can also see the potential that is hidden inside it. DAG have the potential to solve problems that exist in blockchain and if and when it does this the DAG based cryptocurrencies will sky rocket.

Comparison given here is between three DAG cryptocurrencies, DAG Coin is not listed in the comparison. If you know about more DAG cryptocurrencies or want to compare more DAG cryptocurrencies then let me know through comments.

Byteball IOTA RaiBlocks
Address reuse Yes Not after sending Yes
Chain type Main chain DAG PoW DAG dPoS DAG+Blockchain
Confirmation time (theoretical) 30 seconds Instant Instant
Confirmation time (current) ~10 minutes? Minutes to hours, to a day? ~10 seconds
Consensus Mainchaindeterministic Minimal PoWprobabilistic Weighted dPoS voting
Developer ownership 1%? 5%? 4.8%?
Distribution Free airdrops1% premine Public ICO. No premine Manual mining via captcha
Distribution complete No Yes Yes
Divisibility 1 GBYTE: 1 billion Bytes 1 MIOTA: 1 million IOTA 1 XRB: 1024 raw
Fees Very small, based on size of data stored No fees No fees
Focus Smart contracts. Storing arbitrary dataValue transfer Internet of Things (m2m) Value transfer (h2h)
Inflation None/Deflationary (minus distribution) None/Deflationary None/Deflationary
Offline transactions Via blackbytes? Yes Yes?
Partnerships A few? Many None as of 2014?
Public team Partially? Yes Yes
Privacy Yes via Blackbytes EventuallyTest mixer Not on chain
Quantum resistant Not yet. Via NTRU Yes No?
Smart contracts Yes Not yet? No?
Supply (Current) 645,222 GBYTE 2,779,530,283 MIOTA 133,248,290 XRB
Supply (Total) 1,000,000 GBYTE 2,779,530,283 MIOTA 133,248,290 XRB
Transaction limit (theory) Unlimited? Unlimited Unlimited
Transaction limit (current) 20-30 TPS? 500 TPS in stress tests 7k TPS on Testnet?

Source: https://www.reddit.com/r/CryptoCurrency/comments/7iv20r/dag_coin_comparison_byteball_iota_raiblocks_etc/ 

What is DAG? Directed Acyclic Graph. Any good?

Lately, you must have heard about DAG and it’s cryptocurrencies and that it is a competitor of blockchain or might replace the blockchain soon. Well, in this post I will try to explain what is DAG, how different it is from blockchain, which cryptocurrencies use DAG etc

The DAG that IOTA uses is called Tangle.

DAG stands for Directed Acyclic Graph (with Acyclic pronounced as ey-sahy-klik, ey-sik-lik). Acylic means “not displaying or forming part of a cycle” As you can see it is communicated as a graph and what is graph? A graph is something that has vertices and edges.

Graph looks something like this

Below is a comparison b/w DAG and blockchain

First and foremost, DAG is not a blockchain and it is completely different from it.


Now, let’s discuss what is a Cyclic graph?
Any graph that contains at least one cycle is called cyclic graph.

Acyclic is the opposite of cyclic. Any graph that does not have a cycle is called Acyclic graph.

DAGs are direct graphs that have topological sorting. DAG emphasises that one task must be done before moving on to the second task. Think of acyclic graph like a river because it flows only in one direction but it can be divided into many parts connecting to the main river from the upstream.

We all know that with many blockchain based cryptocurrencies the scalability is a big issue, especially for Bitcoin didn’t turn out to be very scalable as people perceived it to be. DAG solutions implemented so far appears to be more scalable.

Time it takes to do a single transaction have increased significantly in blockchain based cryptocurrencies like Bitcoin which for some transactions even take 1 day to process. DAG based cryptocurrencies have faster processing time. Byteball have confirmation time of 10 minutes, RaiBlocks have confirmation time of 10 seconds and IOTA people claimed in Dec 2017 that for some of them it is taking more than a day which I guess happened for very few people.

Transaction Fees:
Bitcoin transaction fees has gone up too much with $3 or more even for small transactions, this makes Bitcoin and other blockchain based cryptocurrencies less preferable for micro transactions. Byteball claims to incur users a very small transaction fees while IOTA and RaiBlocks charge no transaction fees.

Cryptocurrencies based on DAG:

If you know any other DAG based cryptocurrencies, let us know through comments.

The advise to get from here is that DAG indeed looks like a promising solution to problems that exist in blockchain but nobody knows who will win in the end. Proof of Work worked for Bitcoin but few problems also arose, can DAG solutions propose better replacement of Proof of Work? If they do, along with solutions to other problems, then definitely DAG based cryptocurrency prices will go up.

This post was to give you a basic overview of what is DAG. I will cover DAG in more detail in upcoming posts and keep this one updated too.