Bitcoin Binary Option BrokersTrading Bitcoin Options
Are you looking to trade Bitcoin Binary Options? Are you interested in finding a Binary Options broker that will take Bitcoin deposits as well as pay you in Bitcoin?
These are some questions that we at the Trading Club get quite often from prospective members. They are drawn to the allure of trading the crypto currency and handling their transactions safely and securely.
This is why we have decided to take a look at the current Binary Options landscape and locate the most reliable Binary Options brokers.
In the below table, we have a number of Binary Options brokers who are able to provide either Bitcoin as a tradable asset or a means to fund your account.
|Broker||BTC Funding||Minimum Deposit||Max Return||Total Assets||Option Types||Demo Account||Jurisdiction||Support||Broker Site|
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Why Bitcoin Options?
There are numerous reasons why people would want to trade Bitcoin Binary Options. One of the most obvious is the return that a trader can generate when trading the crypto currency.
As most Binary Options traders can tell you, there are a number of factors that impact on the price of a binary option. One of the biggest drivers of this is the volatility in the underlying asset.
Indeed, the more volatile the asset, the price swings in and out of the money and hence the more chance there is that the trader can make an outsized return on a trade.
For those who follow Bitcoin, they know how volatile it can be. From spiking above the price of gold in February 2017, to falling over $300 in the same day, it really is quite unique.
Although there are countless cases for making an investment in Bitcoin, this volatility is most beneficial to the trader. Taking an option with a relatively short time frame and close to the strike could yield tremendous gains.
Why are Bitcoins so Volatile?
Taking a look at the image below of the 30 day realised volatility of Bitcoin compared to that of the EUR/USD pair gives you a slight indication of just how volatile the crypto-currency is. In fact, there have been a number of occasions when it has breached the 15% standard deviation level.
Bitcoin is a volatile currency for a number of reasons. The first and most important is its status as a “safe haven” asset. Similar to gold, it swings wildly given any macroeconomic uncertainty. It is also seen as a dollar hedge. It is for this reason that Bitcoin will move excessively in times of macroeconomic instability.
Bitcoin is also a currency that is heavily traded by citizens of countries with strict exchange controls. Chief amoung these is China. China accounts for slightly more than 90% of the Bitcoin trading volume. Hence, Bitcoin is often tied to any movements that impact on the Chinese market such as announcements about Yuan restrictions etc.
Bitcoin is also volatile because of the limited supply of Bitcoin. Currently, the global supply of Bitcoin is approximately $20 billion. Compare this to the global supply of a currency like the US dollar of $3.8 trillion one can see that it is still minute. Moreover, no government or institution can impact on the total supply of Bitcoin on the market. This is because of reasons giving below. Due to this limited supply, Bitcoin is heavily driven by imbalances in supply and demand.
Funding an account with Bitcoin
Another benefit of Bitcoin is that you can choose to fund your Binary Option account with it. In fact, an increasing number of consumers and online retailers have decided to offer Bitcoin as a method of payment. This is due to a few factors.
Firstly, transacting with Bitcoin is relatively cheap compared to traditional payment processors. This is because there is no middle man or financial institution. Money is sent directly to the wallet of the seller. Another reason why Bitcoin is a favourable purchasing method is the relative security of the transaction. All of the transactions are recorded in the Blockchain and are hence public record.
For traders who want to fund their accounts with Bitcoin, it could also allow for a certain degree of anonymity. Given that defrauding a Bitcoin transaction can’t be done, brokers will not require a client to provide their identification documents. The client can therefore feel safe knowing that they will not have to hand over sensitive information.
Of course, this depends on the type of broker. Many brokers prefer to Know their Clients (KYC) as it is usually required for compliance reasons. In a similar fashion, if you were able to fund your account in Bitcoin, some may want to withdraw their funds in Bitcoin.
As is the case with funding, the transaction is usually quite effortless, fast, cheap and is recorded in the public blockchain.
What is a CryptoCurrency?
For those of you who are new to crypto currency, a limited introduction to the fundamentals underpinning a crypto currency such as Bitcoin is required. Quite simply, a crypto currency is a cryptographically signed record of a transaction in a public ledger. In the case of Bitcoin, the public ledger is called the “blockchain” and it contains all the records of Bitcoin transactions going back to the beginning of time.
In essence, this means that Bitcoin is not even a physical asset nor digital asset for that matter. It is a record of a transfer of value or transaction. Technically what is happening when you are sending some Bitcoin, the transaction is being broadcast to the Bitcoin network and being placed on the blockchain. In order for the transaction to be authenticated, it has to be digitally signed by computers on the network called “miners”.
Solving these transaction chains require the miners cracking mathematical functions or “proofs of work”. Once they have solved the mathematical function, they are rewarded with Bitcoin. Once your transaction has been logged onto the blockchain and authenticated, it remains there for eternity.
The real genius of Bitcoin is the security and money supply of the system. Given that all transactions are linked via the blockchain, no one can “fake” a transaction as it would be immediately void. Similarly, the difficulty of solving a Bitcoin transaction or “hash function” increases steadily with time. This implies that it becomes harder and harder to produce Bitcoin and hence limits supply.
It is for this reason that many people see it as a favourable alternative to Fiat currency. There is no central bank issuing authority and there is no bank required as an intermediary. Individuals can transact in a decentralised manner across the globe with relative ease.
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