Bitcoin Binary Option Trading is on the go! It has been top talk among the next generation Binary option Traders. it can be traded like a commodity, no different than pork bellies or Florida oranges. That said, exchanges like Mt. Gox act as intermediaries for currency transactions, converting wealth from Bitcoin to US dollars to other national currencies, back to dollars or Bitcoin.
What do you mean by Bitcoin?
The simplest answer is: a digital currency. Bitcoin is a form of digital currency, created and held electronically. No one controls it. Bitcoins aren’t printed, like dollars or euros – they’re produced by people, and increasingly businesses, running computers all around the world, using software that solves mathematical problems.
It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. Bitcoin was the first practical implementation and is currently the most prominent triple entry bookkeeping system in existence. But unlike traditional currency, Bitcoin exists only in the digital world and you will never find it in the form of paper or metal money. Well, some vendors offer banknotes and coins denominated in bitcoins but that is more of an exception than a rule. It’s similar to video game money with the big difference that you can buy real world stuff with it.
The first Bitcoin specification and proof of concept was published in 2009 by an unknown individual under the pseudonym Satoshi Nakamoto who revealed little about himself and left the project in late 2010. The Bitcoin community has since grown exponentially.
Bitcoins can be used to buy merchandise anonymously. In addition, international payments are easy and cheap because bitcoins are not tied to any country or subject to regulation. Small businesses may like them because there are no credit card fees. Some people just buy bitcoins as an investment, hoping that they’ll go up in value.
What do you mean by Bitcoin Trading ?
The simple answer is: just like physical currency exchanges. You’re essentially buying one currency with another. The relative value of a nation’s physical currency is a reflection of the country’s economic and financial health, especially since we moved off of the gold standard. The U.S. dollar, for example, is worth more than that of the Mexican peso due to the discrepancies between the two countries’ economies—therefore you can buy lots of pesos for very few dollars (the dollars being relatively more valuable).
The same holds true for Bitcoin, except that its value comes not from an industrial economic base but from the work performed by your computer. That means it can be traded like a commodity, no different than pork bellies or Florida oranges.
That said, exchanges like Mt. Gox act as intermediaries for currency transactions, converting wealth from Bitcoin to US dollars to other national currencies, back to dollars or Bitcoin. And that’s how you make money. By exploiting the constantly shifting relative values of various currencies, savvy investors can make a tidy sum simply from moving money around these markets, in a process known as arbitrage. But they can lose it just as easily.
Bitcoin Binary Option Trading
The whole Binary industry is advancing at a fast pace these days and during the last period we see more and more brokers taking serious steps towards becoming real leaders in the business. Regulation is slowly starting to be requested by more and more traders and as a result, brokers are more interested in becoming regulated. That can only benefit us traders because the trading environment will be safer and a lot of the shady brokers will disappear. Regulation is important, of course, but it is not the only thing we need for the industry to go forward. Constantly improving, innovating and coming up with new ideas is also an important step towards making Binary options trading even bigger than it already is. Such a step is introducing Bitcoin as an asset. At the moment just one UK based broker offers Binary options on Bitcoin, but it’s a start and it’s something fresh.
What is so special about Bitcoin?
Bitcoin is a cryptocurrency and a new and unique financial vehicle, unlike anything the world has ever seen. It’s called a cryptocurrency because it uses cryptography to control the creation and transfer of money. Despite the name, there is no physical coin to speak of, Bitcoin is a completely electronic form of money.
Bitcoin solves the so called ‘’double spending problem’’ present with digital goods. For example, if I have an mp3 file or an ebook on my computer, I can freely copy that file a thousand times and send it to a thousand different people. For a digital currency, the possibility for unlimited copying would mean a quick hyperinflationary death. Bitcoin solves this by maintaining a peer to peer network and recording each transaction in a public ledger called the block chain. Say I send 1 bitcoin from my bitcoin address to my friend John. The bitcoin network records that transaction in the block chain and I no longer have possession of that bitcoin. The coin ‘’moved’’ from my bitcoin wallet to John’s wallet.
What’s so special about Bitcoin? There are many arguments on whether the new virtual currency will succeed or fail. We will not get into this nor discuss the politics behind the project. Our concern is strictly with the profit opportunities provided by this new payment phenomenon. In the next few pages on the new digital currency we will outline our thoughts from the perspective of a trader and a potential investor in this upcoming market.
Where Can I Trade BitCoin Binary Options?
In order to focus this article down a bit I will be using the TradeRush and Anyoption platforms for reference. These are not the only brokers who offer Bitcoin options, but they are among the most well known. TradeRush has Bitcoin listed among the other currencies and is traded in the pair Bitcoin/USD. On Anyoption the options are listed on a separate page. Traderush options are traded just like regular Forex Binary Options with high/low positions, but there is only one expiration per day from what I have found. On Anyoption’s platform the Bitcoin options are traded in lots at $50 per with preset strikes and expiries. The expiries occur twice per month, once in the middle and once at the end with two high and two low strikes available at each strike. (I would like to point out that the Anyoption style of Bitcoin trading is very similar to, but not exactly like, trading 0-100 style Binary Options).
In order to trade Bitcoin options you will first have to answer this question; do you want to day trade Bitcoin or do you want to use near to short term signals? The answer will be the difference between using one broker or the other. Of course, to really harness the power of the Bitcoin market, you may have to use both brokers. The answer is also a little more complicated because of how the options are traded on each platform. Both are basically the same high/low position, but with the traders you buy into a spot position and with Anyoption you buy a preset strike. Just to be perfectly clear a spot position means that whatever the price of the Bitcoin is at the time of the option purchase is your strike price.
Now the question to be answered is can you really trade Bitcoin options? What I mean is, is there a way to analyze the price action of the Bitcoins in a way that will allow you to make good trading decisions? I have to admit that yes, there is. You can find a fantastic chart of Bitcoin versus the U.S. dollar on the Bitcoin website. It is customizable, includes all the commonly used technical indicators and can be displayed in candles, oh yeah! Take a look at the chart below. I have applied my typical indicators of 30 and 150 day EMA’s, MACD and Stochastic. Based on my analysis at the time this screen shot was taken it looks as if the Bitcoin may be in a downtrend. However, there is potential support at the $700 level. If the asset can hold onto this level a bottom/consolidation could form. If the support level does not hold look to $600 and $500 as the next likely areas for prices to hold.
Here is a list of sites to do bitcoin binary option trading
How to Become a Player in the Bitcoin Trading Market
So, even knowing the risks involved you still want to foray into the Bitcoin Market. There are a number of ways of doing so, each with their own strengths and weaknesses.
Buy on an Exchange
Several marketplaces called “bitcoin exchanges” allow people to buy or sell bitcoins using different currencies. Mt. Gox is the largest bitcoin exchange.
People can send bitcoins to each other using mobile apps or their computers. It’s similar to sending cash digitally.
People compete to “mine” bitcoins using computers to solve complex math puzzles. This is how bitcoins are created. Currently, a winner is rewarded with 25 bitcoins roughly every 10 minutes.
Bitcoins are stored in a “digital wallet,” which exists either in the cloud or on a user’s computer. The wallet is a kind of virtual bank account that allows users to send or receive bitcoins, pay for goods or save their money. Unlike bank accounts, bitcoin wallets are not insured by the FDIC.
Though each bitcoin transaction is recorded in a public log, names of buyers and sellers are never revealed – only their wallet IDs. While that keeps bitcoin users’ transactions private, it also lets them buy or sell anything without easily tracing it back to them. That’s why it has become the currency of choice for people online buying drugs or other illicit activities.
Bitcoin has several advantages compared to traditional money transmitting services. We already mentioned two of these above, the elimination of the need for third parties and the bypassing of restrictions.
Another major plus of the new cryptocurrency is the very low cost for sending and receiving bitcoins. While it is possible to send transactions completely free of charge, it is recommended to pay the small fee in order to speed up the sending process.
The fee amount depends on the data size of the transaction. A typical transaction is 500 bytes and carries a fee of 0.0001 BTC. At current prices of $913 per bitcoin, this amounts to a charge of 9.13 cents.
Because the fee is completely dependent on a transaction’s data size and not on the number of bitcoins being sent, a $10 transfer will carry the same fee as a $10 Million transfer. The fee will take a 0.913% piece of a $10 transfer but that same fee will only take 0.000000913% of a 10 Million transfer.
Bitcoin offers benefits to merchants as well, as transactions that involve the digital currency are secure and irreversible. Without the risk of fraud or fraudulent chargebacks, merchants can offer their products at a discount thereby generating more sales or pocket the difference themselves. In addition, with card processors out of the picture, merchants can save on the percentage cut taken by Visa / MasterCard.
How Should I Trade Binary Options BitCoin?
What strategies should you use to trade Bitcoin? I think you could use just about any technique you want, provided it is a good one to start with. The caveat is that this is still a new asset, it is highly volatile and its future is more than uncertain. It may not behave the same way as other assets you may be trading. No one really knows if it will last, no one really knows how it is affected by changing central bank policy. It is well known that the world’s central banks can alter foreign exchange rates through policy change, it only makes sense to think that a change in policy would have an impact on Bitcoin as well. I think that for now using Bitcoin for short term options is still way to risky for newbies because of the amount of volatility in the market. I would recommend to anyone that you first watch the market for a while until you get a grip on how it moves and then start trading.
The bottom line
This relatively new digital currency might have some uses, but for me US Dollars or Euros work just fine and I really don’t feel the need for digital money. Binary Options brokers offer a lot of assets, some volatile, some slow so take your pick. We have enough assets to trade and one more is of little interest and almost not needed at all. Also, it is believed that a large share of Bitcoin’s commercial use is for illicit gambling, drug transactions or money laundering…oops…better stay away for now. So bottom line is this: unless you need a money laundering service, stick to the regular assets…there are plenty.