Understanding Bitcoin CFDs and Synthetic Assets in Financial Trading
Delve into the world of Bitcoin CFDs, synthetic assets, and financial trading through the eyes of Ron Finberg, a former Wall Street equity trader turned writer. Explore the concept of CFDs, how to create a Bitcoin CFD, potential problems, solutions, and the evolving trends in trading these innovative financial instruments.
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Presentation Transcript
Synthetic Bitcoins and a Journalistic Point of View BY RON FINBERG
Who am I? Former Wall Street Equity Trader Writer for Forex Magnates Launched Digital Currency Magnates
Synthetic Bitcoins CFDs Options Futures Binary Options
What is a CFD? CFD = Contract For Difference Created in the UK to avoid taxes associated with sales of shares CFD tracks the price of another security CFDs exists for stocks, commodities, indexes
Example Crude Oil Futures trade at $100 CFD of Oil trades at $100 If the price of Crude Oil rises to $101 the CFD also rises to $101 Traders can buy the CFD or Future of Crude Oil and have the same profit/losses
Bitcoin CFD $$$exy
How to Create a Bitcoin CFD Find an exchange that offers an API (MtGox was the favorite by developers whoops!!) Or use technology provider like Leverate or Gold-i Integrate the API feed to create a synthetic CFD contract Offer to clients
Brokers with Bitcoin CFDs Plus500 (first broker) AvaTrade Markets.com eToro (a bit different CFD)
Potential Problems!! Hard to hedge risk (who wants to be short in a rising market) Do you want to deposit money at MtGox? Latency and disconnections (DDoS) Traders taking advantage to arbitrage slow latent feeds
Solutions Bitcoin exchanges are becoming more transparent easier to trust depositing large sums FXOpen provides direct hedging of bitcoins But Latency still a problem
Trends (Trading) We haven t seen a lot of interest from forex customers to trade bitcoins But offering bitcoins is helpful to attract new customers (see Plus500)
Trends (General) People still don t know why they need bitcoins Too complicated P2P Technology is taking off Community/Crowdsourcing is immensely powerful
Why bitcoins? If my credit card works, why do I need bitcoins or digital currencies? Opportunity: Companies need to make advantages clear. Whoever does this wins!!
Mining, eWallets, Cryptography (Huh) Bitcoin still seems very techy this scares off many new users Opportunity keep things simple Think 20 years ago when everyone used AOL because it was the easiest way to get to the internet. Coinbase doing this well
P2P Money is becoming digital P2P technology benefits of transactions without the middle man appeals to general public Opportunity creating products that are P2P. Doesn t have to be bitcoin. Think P2P credit cards, Mastercoin, etc
Community Rules!! Dogecoin started as a joke But .Palmer s friends and others wanted to see it happen
Dogecoin Launched in December, Dogecoin went viral and an entire community became interested in it The community sent The Jamaican Bobsled team to the Olympics
What We Learned Community Power Dogecoin may have sounded like a dumb idea, but the interest proved that there was demand for a funner digital currency that doesn t appear to techie Sharing ideas with the community is an optimal way to gauge interest quickly
