2015 Global Cryptocurrency Industry Contract Trading Development Report

In 2015 , the main location of digital currency contract transactions was still in China, and the main product was still Bitcoin. Bitcoin contract transactions accounted for more than 90% of the overall contract transactions . The contract trading market is maturing rapidly. Among them, spot trading contracts and futures trading contracts are constantly deepening and growing. At present, the contract trading share has accounted for more than 50% of the overall trading volume , and its market share is still rising rapidly.

Major developments in contract trading in the digital currency industry in 2015:

1 ) On May 1, 2015 , the 796 contract transactions will be permanently free of handling fees

2 ) On June 18 , 2015 , the CoinNice digital currency trading platform was officially launched

3 ) On October 20, 2015 , Huobi API fully supported leveraged trading

4 ) BTCC contract trading was officially launched on October 28 , 2015

5 ) On November 10, 2015 , the price of Litecoin on the Bitcoin trading platform OKcoin plummeted from more than 20 yuan to a minimum of 0.01 yuan.

6 ) On November 30, 2015 , BTC -Q Bitcoin contract trading was temporarily offline .

7 ) On December 22 , 2015 , Huobi.com Bitcoin Seasonal Contract was temporarily offline

8 ) At the end of December 2015 , Coinnice officially proposed the concept of smart contract trading

Comparative analysis and future development of spot contract trading and futures contract trading:

Spot contract trading

It refers to a sales agreement signed for the immediate or future delivery of actual goods. Currently, the main subject matter of digital currency spot contract transactions is Bitcoin and Litecoin. Its actual development form is mainly based on financing and currency lending. Compared with traditional spot contract transactions, it embodies the characteristics of simplicity and efficiency:

Once margin trading is used to open a position, a simple spot contract order is formed;

Two-way trading means that investors can make profits by buying warehouse receipts at low prices and selling them at high prices , or they can make profits by selling them at high prices and buying them at low prices. The trading method is more flexible and increases trading opportunities ;

Margin system : Margin system refers to the need to freeze appropriate margin for the use of financing and currency in order to achieve the purpose of ensuring the performance of the contract, while also playing a leverage role in funds and making full use of funds.

Financing and currency lending is a simple spot contract method. It is simple and efficient, making digital currency contract trading more prosperous, but it also brings the following problems to the spot trading industry:

Although in the long run, margin trading does not change the long-term trend of the value of digital currencies, in the short term, it will seriously affect the rise and fall of prices. For example, if a major fund wants to short Bitcoin, it can borrow several times the amount of Bitcoin through margin trading. By selling a large number of Bitcoins, it will greatly increase the supply of sellers in the market in the short term. When the number of buyers is relatively limited, it will cause a sharp drop in Bitcoin in the short term.

Margin trading creates greater investment risk when there is information asymmetry in the market. Currently, the use of margin trading often accounts for more than 1 times of the funds. Some investors with high risk appetite will use 5 times leverage for margin trading. If the price changes in the opposite direction after the position is opened, it will cause significant losses.

The 24- hour trading characteristics of digital currencies make it very difficult to monitor the market, and strategic trading cannot completely avoid losses caused by price fluctuations. More financial innovations are needed to solve such problems.

(Note: OK , Huobi, BTCC , China Bitcoin, BTCtrade , Coinnice trading platform financing and currency comparison analysis chart statistics for January 2016)

Futures Contract Trading

A futures contract is a standardized contract uniformly formulated by a futures exchange that stipulates the delivery of a certain quantity and quality of goods at a specific time and place in the future. It is the object of futures trading. Futures trading participants transfer price risks and obtain risk returns by buying and selling futures contracts on futures exchanges. Futures contracts are developed on the basis of spot contracts and spot forward contracts, but their most essential difference lies in the standardization of futures contract terms. Futures contracts traded in the futures market have standardized terms such as the quantity of the underlying assets, delivery location, and delivery time , which makes futures contracts universal. In futures contracts, only the futures price is the only variable, which is generated by open bidding in the exchange.

Features of futures contract trading:

With a small investment , you can make a big profit. In futures trading , you only need to pay 5-10% of the performance bond to complete several or even dozens of times the contract transactions. Due to the leverage effect of the futures trading margin system , it has the characteristics of " making a big profit with a small investment " . Traders can use a small amount of funds to conduct large-scale transactions, saving a lot of working capital ;

Two-way trading : in the futures market, you can buy first and then sell, or sell first and then buy, which is a flexible investment method ;

No need to worry about performance issues . All futures transactions are settled through futures exchanges, and the exchange becomes the counterparty of any buyer or seller, guaranteeing each transaction. Therefore, traders do not need to worry about the performance of transactions ;

The market is transparent , transaction information is fully public, and transactions are conducted through open bidding, allowing traders to compete openly under equal conditions ;

With strict organization and high efficiency , futures trading is a standardized transaction with fixed trading procedures and rules. Each link is linked to another and operates efficiently. A transaction can usually be completed within a few seconds.

Components of futures contract trading

1. Trading products

2. Transaction quantity and unit

3. The minimum price change. The quotation must be an integer multiple of the minimum price change.

4. Delivery time​

5. Security Deposit

6. Transaction Fees

7. Liquidation reserve percentage

8. Leverage

9. Real-time use of profits and liquidation sharing