Why does binary options industry need blockchain?
How to make money from home? This topic is covered by many Internet sources and most of the articles are devoted to the advantages of binary options trading. It is usually written that binary options trading is a fast, easy and fun method of earning large sums of money. As a result, a lot of inexperienced traders without a clear understanding of the subject rush into making a quick buck and lose all its money. But is it all that bad? No, it is not, but nowadays it is very hard to find an honest broker.
The binary options working methods are mostly incorrect. This creates a negative attitude of people against such financial instruments. Besides, this source of earning money is tightly regulated. Nevertheless, there is a solution for such kind of problems. It is Giant.Exchange, a self-regulating platform on a blockchain technology which ensures the security of transactions.
We have decided to create a series of articles devoted to this innovation. And this article is the first one and it begins the series of explanations of the Giant.Exchange decentralized technology.
Strengths and Weaknesses of the Binary Options Industry
In the beginning, these financial instruments were not taken seriously, they were unregulated and were not sold to third parties. However, in 2008, at the time when binary options were launched by American Stock Exchange (AMEX), America's largest stock exchange, and by the Chicago Board Options Exchange (CBOE), an options exchange, they became popular. The rules and regulations of binary options trading were developed by the Chicago Board of Trade (CBOT). At that time, there were no informal transactions, and traders' equal conditions allowed them to successfully predict prices.
Trading binary options on exchanges was an object of interest for many people, but not everyone could do this. The emergence of Internet platforms has increased trading opportunities and allowed anyone interested to utilize this financial instrument. At first, only small brokerage firms began to trade binary options and then private investors joined trading. Over time, binary options trading has captured almost all American markets.
Why do binary options cause such great interest? The fact is, that this type of earning money has a number of advantages:
High return. It is real to make 50-80% profit just for one bet. And this is possible literally in five minutes.
Low entry threshold. 100 USD is enough for the bidding and risk control.
Mobility of trading. The trading is available from a large number of electronic devices (computer, smartphone etc.) and the only thing is needed is the Internet access.
Effortless earnings. Giant.Exchange platform provides a simple interface for trading with only two buttons: “buy” and “sell”, which is easy to comprehend even for a beginner in the field of trading.
Abundance of information. To become a professional trader, you will have to study a lot of information, but all of it is available on the Internet.
Binary options trading has been evolving each year and by 2018 the new type of brokers have appeared who offer trading schemes different from the ones from CBOE options exchange and AMEX exchange. The only thing that traders can rely on now is the honesty of brokers. However, a large number of binary options advantages greatly attracts fraudsters.
The main issue of the market is a bad regulation or no regulation at all. The appearance of fraudulent websites and subsequent unfair losses of traders' funds had led to mistreatment of the binary options instrument. In 2005 a large number of mass media even published several articles displaying this financial instrument as a scam. And in the next year, regulators from different countries have imposed bans on their trade.
Nevertheless, the regulators’ restrictions did not become an obstacle for brokers. They register in offshore zones and come up with sophisticated traps for inexperienced traders.
It's worth looking at the issues of the binary options industry which regulators from different countries try to eliminate. To do this, we need to answer the question: what happens when a trader uses the services of a non-regulated broker?
- The broker has no interest in the successful outcome of the trader’s activity.
- The data on the asset price is managed solely by the broker and thus, at best, it might be incomplete, at worst, fictitious.
- The broker has no interest in the provision of transparent trading.
- The broker holds the trader’s deposits and makes the decision whether to pay them or to hold.
- The broker has no interest in uncovering the information about the asset prices.
Therefore, the trader can lose its funds on the brokerage platform. And the regulators’ prohibitions do not solve the above-mentioned issues. Unscrupulous brokers will anyway find a loophole to legally promote their businesses. For this reason, we want to offer an alternative way out of this situation.
The Solution for the Issues of the Binary Options Market
The proper regulation which helps to build the trust between the broker and the trader is not the most crucial in this situation. What is more important is the impossibility of the manipulation. Thus, the issue is solved by the specific environment where everyone does their job — on special trading platforms which provide:
- the automatic execution of binary options contracts
- decentralized storage of funds
- reliable information on the current market situation
The new third party - Oracle - will provide accurate data on the value of the asset (neither the broker nor the trader will have any relation to this). The area of responsibility of the trading participants will be limited. Brokers will be engaged in the compilation of the terms of contracts, and traders — in the contracts conclusion.
Giant.Exchange will be fully able to implement all this in practice. It is an open and self-regulated binary options exchange based on the Giant blockchain. Each user will be able to expand the platform's infrastructure and will have limitations only in the set of competencies and in free funds. To start trading, it is enough to have a minimum amount of Giant Coins or GIC (enough for a contract purchase) at your address. Payments are guaranteed. The platform is secure as well as the funds of the users. We will cover this in more details in the following articles.
You can find the most recent news and insights on the Giant project on our community chat.
References
Giant.Exchange White Paper https://giantpay.network/whitepaper/exchange
Registration on the Giant.Exchange Airdrop campaign https://giant.exchange
Giant White Paper https://giantpay.network/whitepaper
Giant Contracts White Paper https://giantpay.network/whitepaper/contracts
The original article could be found on: https://giantpay.network/pages/why-does-binary-options-industry-need-blockchain
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