#1 Big Problem With Margin Trading

Since very long we have been discussing cryptocurrencies, their futures as well as margin trading. It is obvious for everyone to have queries regarding a problem with cryptocurrencies.

So, paying attention to the same, here, we are going to discuss one of the major problems with margin trading, i.e., delta exchange.

Here we go!

Before going into the detail about delta exchange, let us clear a few important terms.

Cryptocurrency Derivatives:

As the name “derivative” itself says, it is a group of financial contracts which derive its value from the performance of an underlying entity. Bitcoin, Ether, etc. are a few examples of derivatives.

Derivatives can broadly be classified into three categories:

  • Hedging
  • Speculation
  • Access

(Source: Delta Exchange – Cryptocurrency Derivatives Exchange)

Cryptocurrency Futures:

When two parties get involved in a future contract, they agree to buy/sell any asset at a pre-fixed price on a scheduled date. Crypto futures have Bitcoins or Altcoins as the underlying, like Ethereum, Ripple, etc.

Cryptocurrencies Vs. Futures Margin:

If a trader is looking for an investment or purchasing, then, either of the two, futures or margin trading can be used. In margin trading, leverage can be achieved in the following steps:

Step 1:
Borrow money.

Step 2:
For long trading, you can use the borrowed money to buy a crypto asset and for short trading, you can sell the borrowed crypto asset.

Delta exchange:

Delta was launched in August with a single BTC-USD futures contract listed on an exchange. Futures on ETH, XRP, and XLM was listed and a referral program was launched which started to offer the option to hold USDT in Delta wallet. The exchange also provides margin trading for cryptocurrencies.

Cryptocurrencies are geography agnostic. The aim behind bringing something called “Delta-Exchange” into existence is to serve traders all over the globe. All the derivative contracts are and will always be settled in cryptos.

Foundation of Delta:

Behind the foundation of Delta, there is a team of three IIT educated engineers who have worked with bulge-bracket investment banks and have build venture-funded tech startups.

Pankaj Balani, Jitender Tokas and Saurabh Goyal are the three engineers behind the foundation of Delta.

Pankaj Balani(CEO): He has 6 years of experience in derivatives trading in Hong Kong and India at wall street giants like UBS. Not only in derivatives, but he also has a great experience in quantitative finance and Asian equity markets. He also contributed to e-commerce in India.

Jitender Tokas(CBO): Jitender Tokas has worked with Citigroup in India and GIC in Singapore. In financial services, he has more than 8 years of experience. He has been a successful institutional investor as well as an equity research analyst and helped two Indian Internet companies to make money from the market.

Saurabh Goyal(CTO): Saurabh Goyal is a serial entrepreneur and a seasoned tech leader. Housing.com was his first foundation which went to raise money from Softbank. Then, he built and sold a FoodTech company named TinyOwl that scaled to 1.5mn users. He was also a director of Engineering at Hostar- a video streaming platform which has more than 2.5mn users.

The significance of crypto derivatives:

Derivatives are a very crucial component of global financial markets. It offers several risk protections, enable innovative trading strategies and are key contributors to the stability of financial systems.

Currently, the building blocks of fiat-led financial markets are being created in the crypto ecosystem.

Margin trading:

Margin trading is a term given to a process where an individual investor buys more stocks than they can afford to. It involves buying and selling of assets in a single session. The process requires an investor to select or guess the stock movement in a particular session. It is an easy way of making a fast buck.

Final words:

So, it was all about “Delta-Exchange” which is one of the major problems in margin trading.

The article intends to make you aware of margin trading, their futures as well as problems associated with it.

We tried our best to cover all the necessary details related to the subject. We discussed various key terms, margin trading, delta exchange, the significance of crypto derivatives, etc. If you still have any doubts or queries, just feel free to contact and ask us.

If you have some other details related to the topic which you think should be a part of the discussion, definitely share with us.

It will be great to have a two-way conversation.
Hope the content must have helped you.…

A Case For New Taiwan Dollar on the Blockchain

Last week at the Asia Blockchain Summit, “Crypto Congressman” Jason Hsu provided me with the privilege of delivering these remarks to representatives of leading companies in the blockchain industry and government agencies including the National Development Council, National Communications Commission, and American Institute in Taiwan. Formosa Financial is eager to work with Taiwan’s financial institutions and ministries to unleash the benefits of financial technology innovation.

Jason asked me to speak about the potential for a project that many people in the blockchain community have been thinking about recently: issuing, holding, and exchanging New Taiwan Dollar on a blockchain or some other type of distributed ledger system.

I wanted to take this opportunity to first lay out the argument for why doing something like this may be impactful for Taiwan, discuss some potential design considerations in developing an experimental program, and potential next steps.

The Rationale for New Taiwan Dollar on the Blockchain

So why should Taiwanese regulators, financial institutions, and businesses explore the possibility of creating a new, blockchain-based, digital New Taiwan Dollar? There are many potential benefits, but realizing those benefits always starts with first assessing areas for improvement. Allow me to suggest two potential areas where such a project may be able to strengthen the competitiveness of Taiwan’s economy.

Firstly, Taiwan’s highly developed economy provides it with a strong and stable banking sector alongside a world-class electronics and information technology industry. These two factors combined mean that Taiwan ranks very favorably in terms of bank account and smartphone penetration, at over 90% and 70% of the population, respectively. Despite these figures, cash is still the dominant method for settling transactions. Implementing a digital Taiwan dollar can help ensure tax compliance, combat money laundering, and accelerate the velocity of money within the domestic economy.

Internationally, development of a blockchain based system for sending and exchanging NTD with other foreign currencies can help Taiwanese corporates and SMEs more efficiently manage their working capital and trade finance needs. Today, settling payments internationally is often an arduous, multi-step process laden with time delays, leg risk, and opaque fees. By enabling commercial banks to settle transactions between Taiwanese banks handling NTD and banks abroad handling other currencies such as USD or RMB many of these time and capital costs can be reduced significantly if not eliminated altogether. In a blockchain based system, payment, exchange, and settlement all take place simultaneously in a single, atomic, publicly verifiable transaction. Additional features to ensure compliance with foreign exchange rules and liquidity provisioning can be built around the system as safeguards to ensure that all inbound and outbound payments meet necessary requirements before execution.

Design Considerations for NTD on the Blockchain

Now that I’ve outlined some of the potential benefits, here are some key questions that need to be considered in designing a robust, safe, and scalable system to bring NTD onto a blockchain.

The first major question that needs to be addressed is who is the end user of this system. Is the digital NTD intended to be a general purpose replacement for bills and coins, used by citizens to settle retail payment transactions? If not intended for retail use, is this instead for the exclusive use of commercial banks conducting cross-border transactions on behalf of corporate clients?

Having clarity on the end user of the system informs all relevant design considerations in deciding which distributed ledger to use and which features need to be supported for the intended use cases of New Taiwan Dollar upon it.

These considerations include, but are not limited to: consensus algorithm, network node operators, use of a public or private blockchain, how read and write permissions are granted, interoperability with other blockchains, built-in exchange functions and more. By first defining the end users, relevant stakeholders, and intended use case, settling on the proper list of design features for this system will come into clearer and clearer focus.

When considering transformative projects, it is best to define the problem statement and goals as clearly as possible. This is always the first step. From there, deciding on the end user and their desired features will lead to technology selection and development.

At the moment there are numerous blockchains and software providers to choose from, but it may be difficult to find a “one size fits all” solution. That is why my suggestion is to design a small pilot program using proven technology to familiarize stakeholders with the relevant systems and processes to issue, hold, and exchange NTD for other assets on a blockchain in real-time.

A simple method for doing so would be to take existing NTD deposit money held at a bank, transfer it to a dedicated custodial account, then issue fully-reserved NTD tokens on a blockchain that can be transferred, audited, and approved amongst participants in real-time.

With the support of the ministers and chairpeople in the room today, alongside representatives in the banking and technology industries, we have the right collection of talent and motivation to move Taiwan’s economy into the blockchain era. In speaking for both myself and Formosa Financial, it would be a great honor to join you all in this journey. Thank you.…