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The use of cryptocurrency is spreading fast among business communities around the world. One niche with great potential for cryptocurrency use is the market of traditional tradable assets of foreign currencies, shares, bonds, interest rates and minerals.
As soon as the right regulations on blockchain are put in place, traders will be able to use cryptocurrencies such as bitcoin to trade assets. The doors will be wide open for institutional investors, international manufacturers and merchants to start using cryptocurrencies for transactions. Paying for delivered products with cryptocurrencies will greatly reduce transaction expenses since the system is fast, secure and free of additional fees. These qualities will enable buyers and sellers in these markets to guard against risk and save a little cash.
You can imagine the asset demand the use of cryptocurrency in the stock markets would create. The volume of speculation and hedging operations of traders will grow significantly. Combined with high-frequency robots and trading algorithms that help perform transactions faster and more accurately, the market volumes and the income of trading platforms is bound to skyrocket.
As per the Bank for International Settlements (BIS) over the counter derivatives were traded for a whopping $632.5 trillion in 2012. In the same year, traditional exchange markets garnered $52.5 trillion. When the two are compared, the former made 92% of the global derivative market while the latter only made 8%.
According to WTO,
· Global commodity trade made: $18.255 trillion in 2011, $18.323 trillion in 2012,
· Service trade made: $4.2433 trillion in 2011 and $4.4232 trillion in 2012
These values are still way behind the derivative market trade volumes.
What are the challenges?
Delving into the asset markets with cryptocurrencies as a means of trade comes with a few challenges. For one, it is difficult for private persons with small investments to access these markets. And even if you were a big corporation, there is currently no opportunity to trade with exchange asset derivative instruments that are expressed in cryptocurrencies (Bitcoin, Ethereum, Litecoin.)
How Traditional Stock exchanges work
Trading is carried out with the use of fiat currencies and is performed through brokers. The brokers work for huge corporations hence the high expenses and large volumes of transactions. The volume of one trade at exchange markets with the real delivery of currency on the second working day could make up to about $5 million.
On the other hand, the cost of one conversion transaction makes from $60 to $300. On top of these costs, a trader could spend up to $6000 a month for interbank information and trading terminal. This is obviously not conducive for small-scale traders.
In order to curb the high costs of trade, two American stock exchanges, CBOE and CME introduced trade with futures for BTC at the end of 2017. The only problem is that they impose high requirements on the lot size. Another challenge is that futures at these stock exchanges are calculated and not delivered hence trade participants cannot actually buy BTC.
Curbstone brokers or otherwise known as ‘bucket shops’ are forex brokers who offer clients small transactions without registering them with the interbank market. The brokers act as an opposite side in a transaction which means that the client's profit turns out to be the broker’s loss, and the client's loss - into broker's proﬁt. This conflict of interest has resulted in brokers manipulating charts to make transactions of their clients unprofitable. Bucket shops do not publish reports on transactions, which makes activities of such brokers non-transparent.
Of late, many of them have begun offering trade with cryptocurrencies. It makes trading flexible but not ethical and trustworthy as it is with the traditional stock exchanges.
As a matter of fact, this lack of trust in curbstone brokership has led to their ban in some countries where they are considered fraudulent.
So what is the solution?
Cryptocurrencies have enabled ordinary people and investors to save and grow their money discreetly away from unfair control or seizure by state regulatory bodies. The use of cryptocurrency in the blockchain network is a powerful expression of freedom that should be spread across all trading platforms.
In this regard, we believe in the development of future exchange asset derivative instruments that make use of the available cryptocurrencies such as Bitcoin, Ethereum, Litecoin, and other high-liquid cryptocurrencies.
This will make bull or bear traditional assets widely accessible to professionals and beginning traders. More importantly, there will be lower transaction fees about 0.05% when compared to spot exchanges (Bitﬁnex, Binance, Kraken, and Poloniex) that charge in the range of 0.1 to 2%.
BlTEX.ONE is one such innovative trading platform that allows for international trading with assets expressed in cryptocurrencies with a transparent transaction system for the customers. It also has anti-fraud prevention measures to guard against chart manipulations.
The platform allows traders to increase their Bitcoins by speculating on the changes in the price of accessible traditional exchange assets such as the dollar, the euro, gold, oil, beans, cocoa or share indexes.
Our greatest mission is to bring the usage of blockchain and cryptocurrencies into the trading arena. We believe that the creation and functioning of the BITEX.ONE platform for trading with futures on traditional assets would achieve this.
The growing popularity of cryptocurrencies in many developing countries will soon provide them with a legitimate status through effective legislation. When this plane takes off, we want to be ready with an elaborate platform for institutional investors to use cryptocurrencies as investment instruments. Working with futures on traditional assets will create an opportunity for investors to make substantial proﬁt for their customers.
Hardly matches or intends to send/offset the majority of their unmatched volume to a real market (wholesaler / ECN / exchange / etc.), Profits directly from client losses, Cannot fully process withdrawal requests within one business day. It is important to make a distinction between legit market making and bucket shop. A true market maker would ... Don’t get afraid - just read it! I’m just defining the jargon. I’ll explain everything later, down within this article. A forex swap is an agreement between two parties to exchange a given amount of foreign exchange currency for an equal amount of another forex currency based on the current spot rate. The two parties will then be bound to give back the original amounts swapped at a later ... Forex Bucket Shops. What is a Bucket Shop? A Bucket Shop is a firm or company which operates as if it was a legitimate brokerage house dealing in certain financial instruments. When trading with a bucket shop however client trades are not passed onto the open market and there is no physical exchange of stock, commodities or any other financial instrument. Instead these firms take all client ... Forex markets trade trillions of dollars a day. Traders around the globe are always looking for the best broker to trade forex, CFDs, binary options, stocks, cryptocurrencies, etc. With new forex brokers popping up constantly, determining the legitimacy of a broker can be a real challenge. Bucket Shop. Bucket shops are basically scam operations and once you know how they scam Forex traders; you will forever want to stay away from them regardless of how much bonus they are offering for you to sign-up with them. Basically, a bucket shop does not even have any liquidity provider in the backend. They never pass clients' orders to the ... History in the United States Edit. Bucket shops specializing in stocks and commodity futures flourished in the United States from the 1870s until the 1920s. Edwin Lefèvre, who is believed to have been writing on behalf of Jesse Lauriston Livermore, describes the operations of bucket shops in the 1890s in detail. In the United States, the traditional pseudo-brokerage bucket shops came under ... In a simple sentence, forex bucket shops are brokerage firms that have “questionable” trading practices such as unnecessary frequent delays in order execution, frequent price misquotes or re-quotes, and frequent price slippages that are only favorable to the broker. How Do These Bucket Shops work? The name bucket shop comes from brokers back in 60's who used to put their clients’ phone ... However, just because they can do that doesn't mean they do or will. As you have probably noticed, if a broker screws somebody, it will be all over Forex Factory in a matter of minutes and the brokers know this. So, that's something in our favor. Bucket shop transactions were seldom actually executed on any exchange, but if the bucket shop operator did act as a broker and place the customer’s order on an exchange, he would at the same time place the opposite order for his own account, therefore taking no risk. A Little History. The reason to mention the historical context of bucket shops is that they have a long and colorful history ... The bucket shop's exchange is a fiction, which the parties agree to imagine as following the events occurring in a real exchange. Alternatively, the bucket shop operator "literally 'plays the bank,' as in a gambling house, against the customer". Bucketing of orders violates several provisions of U.S. securities law. These prohibitions apply to legitimate brokerages as well as bucket shops ...
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