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The classically understood financial market is characterized by considerable diversity in terms of financial derivatives. Investment bankers and financial engineers are constantly creating all sorts of new types of financial products. Exactly the same is happening in the cryptocurrency sector. Entrepreneurs related to blockchain technology who develop their trading platforms can boast significant achievements in the field of designing modern solutions in the area of banking and stock exchange trading. One of the newest financial derivatives in the cryptocurrency space is binary options. Tytanid is a leader in offering cryptocurrency binary options contracts in the DeFi segment. Also check out Cosmostation and Immediate Bitwave, which is a platform dedicated to the discerning trader’s pursuit of Bitcoin trading opportunities, tailored to their unique trading preferences and style.
In the following publication, we will focus on explaining what are binary options based on blockchain technology.
How do Ethereum binary options work?
Ethereum is a widespread development environment that enables smart contracts to be used to automate trading in the financial markets. Tytanid used this programming platform to develop binary options crypto on the Ethereum protocol, in which cryptocurrencies are the underlying instrument. With Ethereum cryptocurrency binary options, you can multiply your capital by creating new binary options markets, as well as by participating in markets that have been opened by other traders. In this way, you are able to trade in the DeFi area by predicting the prices of individual cryptocurrency assets over a given period of time. Each time you correctly predict the market trend related to a particular underlying cryptocurrency instrument, you will receive a profit for the purchased options.
Each binary option created on the Ethereum protocol has a fixed expiration date after which the option is evaluated. This is to determine whether it is an “In the money” type of contract, which indicates you were right, or an “Out of the money” contract, which makes you wrong.
Additionally, each binary option on Ethereum has a predetermined volume of potential payout that you can achieve. Because in this type of trading, from the point of view of probability, only one outcome is possible – win or lose. For this reason, they are called “binary options”.
Types of Ethereum binary contracts
It must be said at the outset that there is not only one type of contract that can be traded using cryptocurrency binary options. Among traders, the most popular Ethereum binary options variations include:
Up or down
This is by far the simplest cryptocurrency binary options contract as it allows traders to guess how much the value of a particular coin will go up or down after the end of a certain time frame that has been chosen by the market maker.
Inside or outside
This type of cryptocurrency binary options contract requires the trader to set a certain price range with an upper and lower strike price. Traders then predict whether the underlying cryptocurrency will close within or outside of the indicated range when the market matures.
Touch, no touch or double touch.
In this variant of cryptocurrency binary options, traders predict whether the value of the underlying asset will touch a certain price or not. Due to the fact that this type of option closes faster than other types of binary contracts based on digital currencies, it is strongly preferred by some investors related to the cryptocurrency sector.
Ladder
The scalable payout level is one of the elements that makes cryptocurrency ladder binary options attractive to investors. In this variant, traders specify multiple levels in a ladder contract for the future price movement of a given cryptocurrency asset at the time of market maturity. The point here is that a higher strike price yields higher returns, while smaller “rungs” of the ladder lead to lower returns.
Closing thoughts
Due to its low complexity, predetermined risk, 24/7 trading opportunities and high volatility, Ethereum cryptocurrency binary options are an extremely popular financial derivative. Trading binary options on cryptocurrencies such as Ethereum can be very profitable as long as you correctly predict the trend in the markets you choose.
Leading Ethereum cryptocurrency binary options brokers and exchanges will provide a comprehensive range of underlying cryptocurrencies, as well as reduced transaction costs and more sophisticated technical analysis tools, so choosing the best platform is essential. Tytanid is a decentralized financial protocol that is a leader in the binary options market in the DeFi area. If you are an investor looking to use cryptocurrency binary contracts, there is no better place than the Tytanid platform.
Bio
Lucas Komarnicki – In addition to being a lawyer and scholar, Lucas has already amassed over seven years experience in securities trading as a stock broker, and as an ISDA negotiator. Lucas has also advised on several IPO projects and M&A transactions. He possesses a keen understanding of financial markets and their underlying functions, and a desire to transform them in innovative, value-driven manner.
