The rise of the cryptocurrency sector is leading the growth of related financial tools, with most being digital-counterparts of their fiat offerings. Traditional finance products like ETFs, asset storage, and futures trading have been around since 2015, and a newly launched, complex bitcoin-based product is the latest to gain inspiration from the institutional market.
Traditional Finance Products Coming to bitcoin
Announced on May 15, 2018, the world’s first savings account has been launched by the U.S.-based digital currency derivatives platform . Aimed at institutional and retail investors alike, the product offers platform users to earn a fixed-interest in fiat currency based on the amount of bitcoin they hold in LedgerX accounts.
As per reports, the move allows for investors to earn money on their idle digital assets, via a “call overwrite.” A feature of the traditional financial markets, the “call overwrite” allows a person to deposit money to a special trading account, and be able to set a “call option” at a specified future date. But, the process is easier said than done and may lead to a costly mistake if executed incorrectly.
However, LegderX has condensed the call overwrite into the most basic process, ensuring a bare-minimum “point and click” function for wealthy retail investors to indulge in an otherwise institutional strategy, earning U.S. dollars as interest while doing so.
CFTC Certificates Ensure Credibility
Not one to face a backlash from the law, LedgerX holds the distinction of having two -issued certificates; the swap execution facility () and a derivatives clearing license (), which lends credibility to their latest bitcoin product.
Juthica Chou, President and co-founder of , said:
“Everything we do requires both the licenses. And a lot of that is intentional, because by making it a package deal we can offer a number of services to our customers in a really clear, vertically integrated way.”
To use the savings tool, users would first log onto LedgerX’s updated exchange interface, stake the number of bitcoin he/she wishes to earn interest on, and proceed to select an ‘implied rate,’ or the percentage of interest-earning expected. After the input of all variables, the user submits it to LedgerX’ derivatives exchange engine.
Initially, the call-option contracts shall be offered for either a three-month or a six-month duration, with a small transaction fee charged by LedgerX for the service.
bitcoin’s Volatility Beneficial For Call-Options
Chou believes that a large volume of call-option bitcoins are expected, as the system was developed keeping the existing users’ data-patterns and trading behaviors in mind. She further notes that half of the trading volume on LegderX “comes from similar techniques,” which however follow a complex workflow.
As Chou estimates, over $30 million in transactions have been recorded on LedgerX per month, with 70 percent of that volume from derivative trading, 30 percent from swap trading, and an average trade amount of $60,000.
As a currency, ’s volatility as a currency has long been the focus of criticism, however, Chou considers this factor as beneficial for her new product, adding that “it makes the call overwrite such a potentially attractive investment opportunity.”
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FedEx is testing blockchain applications to logistics. The technology behind bitcoin and other cryptocurrencies have since been identified as having for disrupting the logistics and supply chain management (SCM) industry.
Fred Smith. Source:
With many cutting-edge solutions being developed by startup companies, the established corporations seem forced to innovate or lose their perch. FedEx appears to be well aware of this as the company is making significant efforts to develop its legacy blockchain-based solutions for logistics and SCM.
FedEx CEO Talks Up Blockchain at Consensus
“Blockchain has the ability to completely change logistics as we know it,” Fred Smith, Chairman, and CEO of FedEx at the 2018 Consensus Conference. He expressed confidence in the fact that blockchain could have significant implications for the industry. He identified the technology as the “next frontier” that would transform the industry altogether. As a result, the company is already carrying out a pilot test of a blockchain logistics framework to track large and high-value cargo.
In recent times, the company has invested heavily in blockchain and internet of things protocols. Many experts believe both technologies are part of the five technologies that will . According to Smith, it was incumbent on the company to dedicate resources to cutting-edge technology to improve its pedigree and stay ahead of the competition. As a result, the company is collaborating with , a group that focuses on developing standard practices for technological advancements in transportation and logistics. The group also firmly believes that blockchain holds to key to faster and more efficient transportation and logistics framework, thereby freeing up capital to work on other areas of the business process.
Also speaking at the Conference, Robert Carter, the Chief Information Officer at FedEx introduced TRON, a Bluetooth-based tracking sensor, . Carter said the company had filed a record number of patents on account of the low-energy tracking device. TRON is part of the company’s commitment to utilizing technology to stay relevant in the industry. According to Smith, failure to embrace emerging technologies like blockchain is a recipe for disaster. According to him, such companies run the risk of going into extinction.
DHL Includes Blockchain-based Logistics Solution in 2018 Blockchain Report
In a related development, DHL, another logistics behemoth is also of blockchain technology in the global logistics paradigm. The company identified the technology as an essential cog in the wheel of progress of the industry, even including in its 2018 blockchain report titled “.” ShipChain is an Ethereum-based digital SCM and logistics infrastructure. DHL believes ShipChain will be game-changer in the industry, eliminating inefficiencies and enabling smart interaction and management across the entire SCM value-chain.
Many corporations are developing and testing numerous blockchain-based solutions for SCM and logistics. These applications are being implemented in , , , and even the .
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