NJ Bridgewater
[NOTE: This article
should not be construed as investment advice. For advice on investing,
purchasing/selling Bitcoin and other cryptocurrencies, and buying/selling futures
contracts, please contact a licensed financial advisor. The reader is
responsible for his own investments. Disclaimer: this article contains referral
links].
What is Digitex?
One of the most exciting
projects in the crypto-sphere at the moment is the Digitex Futures Exchange,
which is due to launch in Q4 of this year, by December 2018. What makes this
project so unique and so exciting? First of all, Digitex is the first
commission-free cryptocurrency future exchange, which will allow futures trading
on Bitcoin, Litecoin and Ethereum. Bitcoin futures trading is a huge deal, as
you have no doubt seen in the news. It is a multi-billion-dollar business. Secondly,
it will use its own native token, which means that trading and holding the
token itself could potentially be profitable, as the token’s value will
increase as more and more people use the exchange. Thirdly, it gives power to
the users because, whenever new tokens are issued, Digitex token-holders will
be able to vote on the amount of new tokens to be created, thus ensuring that
the rate of inflation is not too high and that the profitability of the token
continues to increase. Fourthly, the supply of tokens is quite limited when
compared with other popular currencies such as Cardano (ADA) and TRON (TRX),
both of which have a total number of tokens in the tens of billions—not to
mention Ripple (XRP), which has a maximum supply of 99,991,852,985 XRP.[1]
Digitex, in contrast, sits comfortably at a current maximum supply of 1 billion
DGTX, with a circulating supply of only 700 million DGTX.[2]
Finally, Digitex is not only the new kid on the block when it comes to futures
trading, but it is building an innovative platform utilizing a ‘DGTX-peg
system’, whereby the DGTX sale price can be locked in without having to actually
exchange possession of the DGTX tokens, which is great for traders who want to
lock-in the value of their tokens while doing a futures trade during periods of
market uncertainty.[3] If
you are interested in getting early access to the Digitex Futures Exchange
platform when it launches in Q4 (December 2018), you
can sign up here (just click on ‘GET EARLY ACCESS’ and then input your e-mail
address and click SUBMIT).
Bitcoin Futures Trading
Before we get into more
details, what is Bitcoin futures trading? First of all, what is futures
trading? According to Investopedia, a futures contract is an agreement between
a buyer and a seller to buy or sell an asset or commodity for a specified price
at a specified date.[4]
A futures contract is thus an agreement to buy and sell the asset/commodity/security.
In many cases, this does not mean that the actual commodity is exchanged. A
futures contract may represent 27 metric tons of corn, for example, but the
corn does not necessarily exchange hands. Originally, futures contracts were
used by farmers to hedge against changes in the price of their crops. Now, futures
contracts are often used by investors to speculate on the price of commodities
and profit by betting on whether its value will go up or down.[5]
In other words, it is a means for investors to bet on the price of Bitcoin or
other assets/commodities. In one sense, it is similar to gambling, as in when
one bets on whether a specified horse is going to win a race, for example. In
both futures contracts and gambling, the eventual outcome of the bet is
unknown. In this sense, a Bitcoin futures contract can be seen as pure
speculation, which is akin to gambling.
A futures contract can also
be used to hedge against potential losses or gains in the value of an asset in
order to reduce volatility associated with the price of the asset.[6]
In other words, one may be a Bitcoin holder/investor who wishes to hedge
against the volatility of the price of Bitcoin. The Bitcoin investor can reduce
the risk of their investment by taking an opposite position in the market to
what they are trying to hedge, with one effect cancelling out the other.[7]
The goal of hedgers is to reduce risk by protecting themselves against any
future drops in the price of the asset.[8]
Hedging also allows the Bitcoin trader who is averse to volatility to lock in
the price that he/she wishes to trade Bitcoin for. Speculators, in contrast,
are assuming the risk, often borrowing money in order to buy a contract in the
hope that the price of the asset will increase in the future. If the market
price drops, they will end up losing their original investment, and more.[9]
If one is selling at a certain price (i.e. the hedger), then one is guaranteed
to receive that price at the end of the contract. One may benefit or lose from
this transaction, based on whether the actual market price is higher or lower
than the price determined in the futures contract. Many people who invest in
Bitcoin are interested in reducing the volatility of transactions and want the
ability to sell at a determined price. There are also many people in the
crypto-sphere who are interested in pure speculation on price movements.
Bitcoin futures trading allows them to do just that.
CBOE/CME Futures Trading,
BitMEX & Digitex
(DGTX)
Bitcoin futures trading
became mainstream when the Chicago Board of Exchange (CBOE) became the first
major derivate exchange to launch Bitcoin futures late last year on 10th
December 2017.[10]
Such a mania was created by this news that trading had to be halted twice due
to CBOE speed breakers, which can pause or slow down trading if price movements
are excessive.[11]
This was followed by the launch of Bitcoin futures on the Chicago Mercantile
Exchange (CME), which is the world’s largest futures exchange, with about 1,049
contracts being made in January alone, representing some 5,245 BTC, whereas
CBOE’s contracts for the same time frame represented 3,860 BTC.[12]
As of July 2018, the world’s largest exchange-traded fund (ETF) provider,
BlackRock, has announced that they assessing their potential involvement in
Bitcoin investment, including whether they should invest in Bitcoin futures.[13]
Bitcoin futures trading is a growing phenomenon, with Bitcoin futures contracts
in Q2 of 2018 93% higher than the previous quarter, almost doubling the total
amount of contracts, according to CME Group. The increasing involvement of Wall
Street and other institutional investors in Bitcoin futures trading and Bitcoin
investment can only be a good thing in the long run, as it means more demand
for an extremely limited asset. But how can the ordinary investor get involved
in Bitcoin futures trading?
Various Bitcoin futures
exchanges already exist with easy access for individuals. Digitex Futures
Exchange is going to be launched in Q4 of 2018, and you can sign
up for their waiting list for early access here. As a zero-commission
exchange, Digitex will allow you to buy and sell futures contracts with ease
and with zero fees. It is currently (or will be soon) the only Bitcoin futures
exchange to offer such fluidity and low-cost access to the Bitcoin futures
market. “Simply put,” Adam Todd, the founder of Digitex, says, “it’s a
commission-free futures exchange” which “sustains itself indefinitely by using
its own native currency instead of charging transaction fees” by using “the
DGTX token.”[14]
This is possible because a small number of new tokens will be created each year
to cover costs (from 2021), allowing a small inflation rate in the total number
of tokens while also ensuring that the exchange maintains zero transaction
fees. This benefits all users of the platform, as well as DGTX token holders,
who can be sure that there is only a small annual increase in the number of
tokens, while an increasing number of investors flock to the platform, driving
up demand for the native token. This makes Digitex stand out from its chief competitor
at the moment, BitMEX.
BitMEX (Bitcoin Mercantile
Exchange) is a trading platform which offers investors access to global
financial markets using Bitcoin; in particular, it allows investors to make
several different types of contracts, including perpetual contracts, in which
one can hold a position for as long as one likes, futures contracts (which we
have discussed above), and two other unique contracts: a BitMEX UP Contract and
a BitMEX DOWN contract.[15]
A BitMEX UP (Upside Profit) Contract lets buyers participate in the potential
upside of the investment instrument, paying a premium on a trade date, which
entitles him/her to receive the difference between the settlement price and
strike price on the maturity date, if positive. If not positive, no payment
occurs. All payments being settled in Bitcoin. A BitMEX DOWN (Downside Profit)
Contract is similar, except that if the underlying asset (e.g. Bitcoin) falls
below the KO barrier price during the life of the contract, it expires,
settling early using the KO barrier price. Again, all transactions are settled
in Bitcoin, with the possible loss being limited to the initial investment. To sign up with BitMEX for a 10%
fee discount for 6 months, use
the following referral link. If you are interested in buying a futures
contract straightaway and cannot wait for the launch of the Digitex platform,
then this is one of the best options.
The DGTX token and how it
works
What are some of the key
features of Digitex which make it unique, and how does the Digitex token work?
Many initial coin offerings (ICOs) provide coins that are of little real-world
utility, or which have no real use case. Even those which do have a use-case
are often of such fringe use that they have no long-term prospects. Do I really
need an ICO for Refrigerator Coin, for instance (this doesn’t exist, but it
could)? This is something I address in more detail in my article on 5
Questions You Should Ask Yourself Before Investing in an ICO.[16]
So, what makes Digitex unique? The answer to that lies in the DGTX token
itself. DGTX is the native token of the Digitex Futures Exchange, which was
created by businessman and trader Adam Todd in 2017 as an ERC-223 token (i.e.
an Ethereum-based token). ERC-223 tokens are more modern Ethereum-based tokens
with additional features, such as not being able to be transferred to contracts
which won’t allow the token to be released, which helps to prevent human error.[17]
According to Adam Todd (2018), the Digitex Futures Exchange is the first
exchange of its kind to develop and use its own token, which allows it to
eliminate all trading fees.[18]
In order to use the futures trading platform, traders must have a balance of
DGTX tokens, as all ticker prices are denominated in DGTX.[19]
In other words, if you want to use the Digitex Futures Exchange, you don’t have
to buy and transfer Bitcoin or USD. Rather, you have to purchase a number of
DGTX tokens equivalent to the value of the futures contract you wish to
purchase. The constant use of the DGTX token, according to the law of supply
and demand, should lead to an increase in its value, thus benefiting long-term
DGTX token-holders.
So, how does the platform
work and what other unique features are there? In addition to having its own
native token, the Digitex Futures Exchange maintains liquidity through what are
called ‘Digitex Market Makers’. These are basically trading robots which are
programmed to break even while placing bids and offers, increasing liquidity on
the platform.[20]
This is made possible by the fact that the trading bots have a large amount of
DGTX at their disposal—some 200 million DGTX, which is 20% of the total number
of DGTX tokens.[21] According
to the Digitex
whitepaper, “Digitex market makers… help create liquid futures markets that
have tight bid and offer spreads, even in volatile market conditions.”[22]
The whitepaper goes on to argue that “not being driven by profit, the market
makers do not exist to extract value from traders”.[23]
Rather, they ensure that “a large number of DGTX tokens are actually being used
actively for the purpose of trading, with all the beneficial network effects
that brings, rather than those tokens sitting dormant in a speculator’s wallet”,
helping “to create very liquid futures markets from day one, which combined
with zero transaction fees will attract a large number of traders to the
Digitex Futures Exchange.”[24]
 |
| Adam Todd, creator of Digitex |
Being a businessman and
trader himself, rather than a techie, Todd knows the importance of creating
value for the tokens and the need for the price of DGTX to increase for DGTX
token-holders. While providing the means to create a fee-free trading platform,
the DGTX token also exists to reward token-holders. Thus, the whitepaper states
that “large numbers of traders will create a surge in demand for DGTX tokens
and a price bump that will convince speculators to take an early profit by
selling their DGTX tokens to those traders, thus transferring more tokens from
dormancy in wallets to active use on the futures markets.”[25]
“In this way,” Todd argues, “the Digitex market makers are a catalyst to a
highly efficient trading environment where the majority of the ecosystem’s
protocol tokens are in active use.”[26]
Thus, the key principles behind the DGTX token and the Digitex market makers
are liquidity, profitability and increasing interest in the project. This is
important, as a futures exchange can only flourish if it continually attracts
new investors, new speculators and a loyal base of users. This is also the
reason why DGTX token-holders have an active role in deciding on the creation
of new tokens, which cannot take place before the start of 2021, when the first
new DGTX tokens will be minted to cover the ongoing costs of maintaining the
Digitex Futures Exchange.[27]
Token-holders will be able to participate in the decision-making process by
voting on proposals for the creation of new tokens, determining the exact rate
of inflation. This will be done on the basis of 1 DGTX = 1 vote.[28]
Thus Digitex is not only a platform created in the interests and profitability
of users, but it is also democratic in the way that it functions. This unique
aspect instantly distinguishes it from BitMEX and other rivals.
As we near Q4, excitement is
already building for the eventual launch of the Digitex futures trading
platform. Thousands of people are now signing up for the Digitex Early
Access Waitlist. For the last several months, Digitex has been focused on
developing their platform, putting everything into hiring programmers, setting
up their offices, and launching their new blog. However, Digitex is now in
full-gear marketing mode, offering an amazing new promotion which is guaranteed
to increase the number of people signing
up for their waitlist. As more hype is generated, the number of potential
Digitex investors increases, which will eventually drive up the value of the
DGTX token itself. The initial launch will be small, with a select group of
5,000 friendly testers who will be given free money to play with and will thus
be very active in the early usage of the platform.[29]
These 5,000 initial testers will each be given 1,000 DGTX to play with. When
people join the waitlist, they will initially be at the back of the queue.
However, by referring friends, people can skip ahead of the crowd and move
ahead in the rankings, until they eventually reach the top 5,000, thus gaining
access to this initial 1,000 free DGTX.[30]
And it gets even better: the top 10 referrers will actually receive a share of
1 million DGTX tokens, equally divided.[31]
They will thus each receive 100,000 DGTX, as well as being among the first
5,000 testers of the platform.[32]
While testers will not be able to withdraw their free 1,000 DGTX, they will be
able to withdraw any profits that they earn from the platform.[33]
This is thus FREE money to play with. Who could pass up on such an opportunity?
For more, and to sign
up, CLICK HERE.
Conclusion
If you’re interested in
futures trading, particularly in trading the top three cryptocurrencies:
Bitcoin (BTC), Litecoin (LTC) and Ethereum (ETH), then you’ll definitely be
interested in the Digitex Futures Exchange. It is, by far, the most innovative,
democratic and exciting futures exchange, which will allow newbies and
experienced traders alike to take a dive into the world of cryptocurrency
investment, hedging and speculation. For too long, investment portfolios and
futures trading has been limited to the rich and elite, the bankers and
financiers. Now, with the advent of cryptocurrencies, it is possible for
ordinary people to get involved and try to make their own fortune in the
cryptocurrency space. This is made possible through a number of trading platforms,
including cryptocurrency exchanges and futures exchanges. Digitex Futures
Exchange and BitMEX are two of the most prominent examples of these platforms.
Each have their own merits and BitMEX
is definitely the crowned king of Bitcoin futures trading at the moment.
Digitex Futures Exchange, however, offers a transaction-free trading platform
that which innovative, creative and has great potential. Moreover, the DGTX
token itself has great potential. The original Digitex token sale raised $5.2
million USD in only 17 minutes,[34]
demonstrating the hype surrounding the platform. It was initially offered for
$0.01 USD per token, while the current price sits at $0.019918,[35]
which is nearly twice the value. While I cannot offer financial advice, this is
a remarkable gain in less than eight months and before the platform has even
launched. If you want to get in on this platform, you
can sign up here. Remember to always do your own research and keep on
learning.
NJ Bridgewater
Sources
Gaurav Agarwal (2018) Futures trading with Digitex, Medium,
March 8, 2018. URL:
https://medium.com/coinmonks/futures-trading-with-digitex-d8d521a21278
(accessed 03/09/2018)
Nafis Alam (2017) How Bitcoin futures
trading could burst the cryptocurrency’s bubble, The Conversation,
December 14, 2017 3.14am AEDT. URL: http://theconversation.com/how-bitcoin-futures-trading-could-burst-the-cryptocurrencys-bubble-88971
(accessed 03/09/2018)
The BitFeed (2018) Digitex Futures
Review, The BitFeed, 21 June 2018. URL:
https://www.thebitfeed.com/digitex-futures-review/ (accessed 03/09/2018)
BitMEX (2018) FAQ: What is
BitMEX, BitMEX.com. URL:
https://www.bitmex.com/app/faq#What-is-BitMEX (accessed 03/09/2018)
Nicholas Bridgewater (2018) 5
Questions You Should Ask Yourself Before Investing in an ICO, Digitex
Futures Exchange Blog, May 30, 2018. URL:
https://blog.digitexfutures.com/cryptocurrency/5-questions-you-should-ask-yourself-before-investing-in-an-ico/
(accessed 03/09/2018)
Evelyn Cheng (2017) Bitcoin debuts on
the world's largest futures exchange, and prices fall slightly, CNBC,
Published 5:06 PM ET Sun, 17 Dec 2017; Updated 5:44 PM ET Mon, 18 Dec 2017.
URL:
https://www.cnbc.com/2017/12/17/worlds-largest-futures-exchange-set-to-launch-bitcoin-futures-sunday-night.html
(accessed 03/09/2018)
Digitex Futures (DGTX), CoinMarketCap, 2018. URL:
https://coinmarketcap.com/currencies/digitex-futures/ (accessed 03/09/2018
10:48 AM AST)
Brian Perry (2017) Beginner's Guide To Trading Futures, Investopedia,
Updated December 12, 2017 — 12:53 PM EST. URL:
https://www.investopedia.com/university/beginners-guide-to-trading-futures/
(accessed 03/09/2018)
Nicola Sargeant (2018) What is the difference between hedging and
speculation? Investopedia, Updated June 12, 2018 — 2:57 PM EDT.
URL: https://www.investopedia.com/ask/answers/difference-between-hedging-and-speculation/
(accessed 03/09/2018)
William Suberg (2018) BlackRock Eyes
Bitcoin Futures, Market Reacts to Increased Institutional Interest, Coin
Telegraph, JUL 16, 2018. URL:
https://cointelegraph.com/news/fn-blackrock-eyes-bitcoin-futures-market-reacts-to-increased-institutional-interest
(accessed 03/09/2018)
Adam Todd (2017) Digitex:
A commission-free, trustless future exchange for trading digital
currency prices (white paper), December 5th, 2017. URL:
https://www.digitexfutures.com/wp-content/uploads/2017/12/Digitex-Whitepaper-11.0.pdf
(accessed 03/09/2018)
Adam Todd (2018) Why Trade Bitcoin
Futures Instead of Bitcoin? Digitex Futures Exchange Blog, Jul 30,
2018. URL: https://blog.digitexfutures.com/trading/why-trade-bitcoin-futures-instead-of-bitcoin/
(accessed 03/09/2018)
Adam Todd (2018b) DGTX Token Sale Raises $5.2 Million in 17
Minutes, Digitex Futures Exchange Blog, January 17, 2018. URL:
https://digitexfutures.com/dgtx-ico-token-sale-sells-out-in-17-minutes/
(accessed 03/09/2018)
Adam Todd (2018c) 5 Million DGTX
Airdrop to the First 5000 on Our Waitlist, Digitex Futures Exchange
Blog, August 20, 2018. URL:
https://blog.digitexfutures.com/digitex-futures/5-million-token-airdrop-to-the-first-5000-on-our-waitlist/
(accessed 03/09/2018).
XRP (XRP), CoinMarketCap,
2018. URL: https://coinmarketcap.com/currencies/ripple/ (accessed 03/09/2018
10:47 AM AST)
Links for More Information
The
1 Million DGTX Giveaway
BitMEX
sign-up link
Buy Bitcoin on Coinbase
Start trading
cryptocurrencies on Binance
Nicholas
Bridgewater (2018) What is Bitcoin? Digitex Futures Exchange Blog, May
14, 2018. URL: https://blog.digitexfutures.com/cryptocurrency/what-is-bitcoin/
Nicholas
Bridgewater (2018) What is Ethereum? Digitex Futures Exchange Blog, May
14, 2018. URL: https://blog.digitexfutures.com/cryptocurrency/what-is-ethereum/
Nicholas
Bridgewater (2018) Where to Buy and Sell Bitcoin. Digitex Futures Exchange
Blog, May 14, 2018. URL: https://blog.digitexfutures.com/cryptocurrency/where-to-buy-and-sell-bitcoin/
Nicholas
Bridgewater (2018) Where to Buy and Sell Ether. Digitex Futures Exchange
Blog, May 14, 2018. URL: https://blog.digitexfutures.com/cryptocurrency/how-to-get-ether-and-where-to-buy-and-sell-it/
[1] See: XRP (XRP), CoinMarketCap,
2018. URL: https://coinmarketcap.com/currencies/ripple/ (accessed 03/09/2018
10:47 AM AST).
[2] See: Digitex Futures
(DGTX), CoinMarketCap, 2018. URL: https://coinmarketcap.com/currencies/digitex-futures/
(accessed 03/09/2018 10:48 AM AST).
[3] See: The BitFeed (2018)
Digitex Futures Review, The BitFeed, 21 June 2018. URL: https://www.thebitfeed.com/digitex-futures-review/
(accessed 03/09/2018).
[4] See: Brian Perry (2017) Beginner's
Guide To Trading Futures, Investopedia, Updated December 12, 2017 —
12:53 PM EST. URL: https://www.investopedia.com/university/beginners-guide-to-trading-futures/
(accessed 03/09/2018).
[5] See: Perry (2017).
[6] See: Nicola Sargeant
(2018) What is the difference between hedging and speculation? Investopedia,
Updated June 12, 2018 — 2:57 PM EDT. URL: https://www.investopedia.com/ask/answers/difference-between-hedging-and-speculation/
(accessed 03/09/2018).
[7] See: Sargeant (2018).
[8] See: Nafis Alam (2017) How
Bitcoin futures trading could burst the cryptocurrency’s bubble, The
Conversation, December 14, 2017 3.14am AEDT. URL: http://theconversation.com/how-bitcoin-futures-trading-could-burst-the-cryptocurrencys-bubble-88971
(accessed 03/09/2018).
[9] See: Alam (2017).
[10] See: Alam (2017).
[11] See: Alam (2017).
[12] See: Evelyn Cheng (2017) Bitcoin
debuts on the world's largest futures exchange, and prices fall slightly, CNBC,
Published 5:06 PM ET Sun, 17 Dec 2017; Updated 5:44 PM ET Mon, 18 Dec 2017.
URL: https://www.cnbc.com/2017/12/17/worlds-largest-futures-exchange-set-to-launch-bitcoin-futures-sunday-night.html
(accessed 03/09/2018).
[13] See: William Suberg
(2018) BlackRock Eyes Bitcoin Futures, Market Reacts to Increased Institutional
Interest, Coin Telegraph, JUL 16, 2018. URL: https://cointelegraph.com/news/fn-blackrock-eyes-bitcoin-futures-market-reacts-to-increased-institutional-interest
(accessed 03/09/2018).
[14] See: Gaurav Agarwal
(2018) Futures trading with Digitex, Medium, March 8, 2018. URL: https://medium.com/coinmonks/futures-trading-with-digitex-d8d521a21278
(accessed 03/09/2018).
[15] BitMEX (2018) FAQ: What
is BitMEX, BitMEX.com. URL: https://www.bitmex.com/app/faq#What-is-BitMEX
(accessed 03/09/2018).
[16] See: Nicholas Bridgewater
(2018) 5 Questions You Should Ask Yourself Before Investing in an ICO, Digitex
Futures Exchange Blog, May 30, 2018. URL: https://blog.digitexfutures.com/cryptocurrency/5-questions-you-should-ask-yourself-before-investing-in-an-ico/
(accessed 03/09/2018).
[17] See: The BitFeed (2018).
[18] See: Adam Todd (2018) Why
Trade Bitcoin Futures Instead of Bitcoin? Digitex Futures Exchange Blog,
Jul 30, 2018. URL: https://blog.digitexfutures.com/trading/why-trade-bitcoin-futures-instead-of-bitcoin/
(accessed 03/09/2018).
[19] See: Todd (2018).
[20] See: Todd (2018).
[21] See: Todd (2018).
[22] See: Adam Todd (2017) Digitex:
A commission-free, trustless future exchange for trading digital
currency prices (white paper), December 5th, 2017. URL: https://www.digitexfutures.com/wp-content/uploads/2017/12/Digitex-Whitepaper-11.0.pdf
(accessed 03/09/2018).
[23] See: Todd (2017), p. 16.
[24] See: Todd (2017), p. 16.
[25] See: Todd (2017), p. 16.
[26] See: Todd (2017), p. 16.
[27] See: Todd (2017), p. 4.
[28] See: Todd (2017), p. 4.
[29] See: Adam Todd (2018c) 5
Million DGTX Airdrop to the First 5000 on Our Waitlist, Digitex Futures
Exchange Blog, August 20, 2018. URL: https://blog.digitexfutures.com/digitex-futures/5-million-token-airdrop-to-the-first-5000-on-our-waitlist/
(accessed 03/09/2018).
[30] See: Todd (2018c).
[31] See: Todd (2018c).
[32] See: Todd (2018c).
[33] See: Todd (2018c).
[34] See: Adam Todd (2018b) DGTX
Token Sale Raises $5.2 Million in 17 Minutes, Digitex Futures Exchange Blog,
January 17, 2018. URL: https://digitexfutures.com/dgtx-ico-token-sale-sells-out-in-17-minutes/
(accessed 03/09/2018).
[35] See: CoinMarketCap (2018)
Digitex Futures (DGTX), CoinMarketCap. URL: https://coinmarketcap.com/currencies/digitex-futures/
(accessed 03/09/2018 19:18 AST).
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