Conventional Investment Tools Are Working To Grow Inside The Newly Forming Crypto Ecosystem
How Are Traditional Investment Tools Working With The Growth Of The Crypto World
With the growth and expansion of the virtual currency world, we have seen the surge and creation of many new startups and companies. Indeed, there are new financial instruments available in the market right now.
Some of the new instruments are similar to other proposals offered in the past by traditional financial institutions. One of these examples are bonds, which have existed for more than 500 years, as CoinTelegraph shows.
These bonds are a fixed-income instrument in which lenders give funds to a specific business in order to achieve their aspirations. Borrowers usually receive interest rate payments once a year until their funds are returned. However, this could fluctuate depending on variable rates.
However, these instruments can already be seen in the blockchain market. At least, blockchain helped issuers of these bonds to offer better services to lenders. For example, earlier this year, the Commonwealth Bank of Australia issued the first blockchain-based bond. At the same time, The Spanish bank BBVA signed a $117 million loan to improve its services by implementing smart contracts.
Crypto-related bonds could also generate money to grow and become an alternative to Initial Coin Offerings (ICOs). Earlier this year and at the end of 2017, Initial Coin Offerings expanded all over the world. Some countries such as China and South Korea decided to ban these initiatives due to concerns over the funds gathered and possible scams.
During the last months, the number of ICOs and money moved by them has been reduced due to a bear market that is affecting the whole industry.
Futures markets are also another traditional way of investing in virtual currencies. Back in December 2017 the Chicago Board Options Exchange (CBOE) and the Chicago Mercantile Exchange (CME) launched Bitcoin futures that are cash settled.
These futures allow two different parties to buy or sell virtual currencies at a specific price in a pre-determined date. Futures market are also a good tool for investors to mitigate risks and boost profitability.
An investor that believes that Bitcoin’s price will grow in the future can purchase a futures contract at current prices. Once the price increases, the investor would have made a good profit on his investment. The same can happen, of course, if a person decides to short Bitcoin because he is not sure about its future.
Futures are a good tool for traders to shield themselves against price fluctuations. At the same time, it is possible for individuals living in countries where virtual currencies are banned to have contact with the crypto market in some way.
There are many different financial tools for investors to enter the cryptocurrency market. One of the platforms that allow users to have a wide range of tools is Biboz, an AI-driven exchange that launched bonds. This will provide new opportunities for traders and investors that have exposure to the crypto market.
Startups are also looking for different ways to raise capital after a bear market that affected Initial Coin Offerings. It is clear that new financial investments are entering the world of virtual currencies and 2019 will witness how these new tools will grow among investors.