LedgerX Contracts: Bet on Next Bitcoin Mining Rewards Halving Event

LedgerX, a federally-regulated institutional trading and clearing platform for conducting cryptocurrency swaps and options trades, has introduced a new binary contract for bitcoin (BTC).

In an official blog post, LedgerX’s development team noted that their LedgerX Halving Contract (LXHC) will allow users to bet on what they think will be the date of the next halving of bitcoin mining rewards. Every four years, the compensation bitcoin miners receive (for validating blocks of transactions) is reduced by 50% and the event is commonly referred to as “halving.”

Betting On The Next Halving Event

The next bitcoin “halving” event is expected to take place in approximately 473 days from today, or after 68,276 additional blocks have been produced on the Bitcoin blockchain. This, according to data from the Bitcoin Block Reward Halving Countdown. As mentioned in LedgerX’s announcement:

This [LXHC] contract will allow you to get a fixed payoff if the next halving block (#630,000) happens before a certain date and time. If the block is discovered after, the contract expires at zero. The result is an extremely clean binary payoff that is verifiable by all participants — a great demonstration of the value of a public blockchain.

Traditional binary contracts allow people to bet on win/lose types of events - which typically occur in sports games or elections. However, LedgerX’s bitcoin halving binary contract is different because bets are being placed on the outcome of an event that will definitely happen, whereas conventional binary contracts may bet on events which might not occur.

Comparing oil extraction processes and bitcoin mining, LedgerX’s post explains: 

To give an analogy, imagine you are an oil producer such as Exxon Mobile and know that one day in 2020, the number of barrels of oil you extract will go down by half, forever. But you’re not certain which date that will be. This would materially impact planning for investment and operations. Bitcoin miners face this exact risk approximately every 4 years for the block reward that they earn.

LedgerX's Bitcoin Savings Account

In May 2018, LedgerX launched a bitcoin savings account, which allows investors to earn interest on their BTC deposits. The crypto account also allows users to earn 2X the spot price on the product’s purchase date, if the price on maturity (expiration of contract) is approximately twice what it was when the contract was first issued.

Based in New York City, LedgerX has obtained a license from the US Commodity Futures Trading Commission (CFTC) as both a Derivatives Clearing Organization (DCO) and a Swap Execution Facility (SEF). Since launch, LedgerX has been developing crypto-related financial products that are functionally similar to traditional forms of investments. For instance, the basic idea of the LedgerX savings accounts is to allow investors to earn a yield, or return, in fiat currency (USD) on their bitcoin holdings.

In addition to 'HODLing' cryptocurrency, users can earn interest on their bitcoin deposits which is somewhat similar to what traditional banks offer with products like certificates of deposit (CD).

Billionaire Novogratz: Altcoins Won't Pump Like In 2017 Bull Run, Bitcoin Will Dominate

It appears that cryptocurrency prices have finally begun to recover after enduring an extended bear market which lasted throughout 2018.

As the market capitalization of Bitcoin (BTC) and other major cryptoassets continues to rise, several analysts have been drawing comparisons between what they’re seeing in the current market and what they observed during the historic bull market of late 2017 and early 2018.

Commenting on the recent crypto market price movements via Twitter, Ran NeuNer, the host of the CNBC Africa Trader show, remarked:

The market is running but we still haven’t seen the crazy alt pumps, pumps where coins do 40% in a day...is it coming?

Bitcoin To “Outperform” All Other Cryptos “This Time”

As the bitcoin price begins to recover, there have been many predictions made regarding the anticipated performance of altcoins. Twitter user “Crypto Bitlord” (@Crypto_Bitlord), a widely-followed digital asset market analyst, believes XRP, which currently has a market cap of around $16.3 billion, may trade as high as $10.

However, prominent crypto investor Michael Novogratz believes that digital asset traders are a lot smarter this time, when compared to some of the bad investment decisions they might have made during the initial coin offering (ICO) craze of 2017.

Novogratz, who’s the founder and CEO of Galaxy Digital, a full-service crypto merchant bank, has predicted that in this market run, Bitcoin will “outperform” all other cryptoassets.

On May 16th, 2019, the Bitcoin price surged to a 2019 high of $8,373 according to CryptoCompare data. In response to bitcoin’s recent price movements, Juan Villaverde, the Chief Analyst at Weiss Crypto Ratings, told CryptoGlobe: 

Bitcoin could fall to as low as $4,400. But [if] it does, it will be the best Bitcoin buying opportunity since 2015.

“More Good News For New Bitcoin Users”

Villaverde, an econometrician and mathematician focused on developing various crypto index models at Weiss Ratings, believes bitcoin would be a great buy at a lower price (as suggested above) because of the following reasons:

  • “The usage of Bitcoin is near all-time highs – 450,000 transactions per day. That’s up from a low of 150,000 in April of 2018 and approaching the all-time high of 490,000 in December of 2017.”
  • “Despite the high transaction volume, fees on the Bitcoin network are at their lowest levels since August of 2017 – more good news for users.”
  • “The Bitcoin block size is now greater than ever before, thanks to the Segwit technology upgrade.”

Villaverde further noted that the predictions are “based on studying the time patterns in Bitcoin's rises and falls throughout its 9 year trading history.” He explained that the time patterns have been analyzed by using an “algorithm-based market cycles model.”

The Chief Analyst at Weiss Ratings also mentioned that the bear market “ended on December 15th 2018 and the model confirmed this shift in trend on March 26th of this year.”

He added:

Then, after the rally that took place starting on April 25th, the same model told me a new bull market was now underway. The same model indicated a 30% to 45% correction due as of late April-early May and we seem to be experiencing that right now.