Bitcoin Forum

I am not associated with it, but my old business partner is putting together a site that has potential and he is not on this forum.  He gave me the quick pitch and it is really simple.

The site would be called Bitcoin Price Locker and sub-titled "An Intro to Bitcoin Futures"

The site would allow you to deposit Bitcoins into the site and the price of Bitcoin at the moment of the deposit would be noted.  You would choose a time period 24 hours, ten minutes...others, from a set of choices and you can withdraw your coins after that time period, but the withdraw balance would be based on the unchanged price of Bitcoin.  That sounds confusing, but picture this.

1. You deposit 1 BTC and the price at the time of deposit is $1000 per bitcoin, and you choose a 24 hour period.

2. 24 hours later the price of Bitcoin has dropped to $500 per coin, so your new balance for withdrawal should be 2 BTC, the value based on the held/locked price.  The opposite could also be true.


He is going to back the site with a good amount, I know him and he is aware of high possible loses.  I assume that he wants to help a new person better understand the futures market and eventually direct them to other sites that do that.  Futures work basically the same as the site description, but another person has to pick up the option, rather than the website. So, you would need another trader to agree to your 1 BTC at $1000 for 24 hours.

I am trying to get him on the forum, but either way I will shoot out links once it is up and running.  It is all his project and site, so don't let your positive or negative feelings for me alter you giving him a chance.  But, also, read everything, talk to other people and make your own choices. 

Just trying to understand.
Is it not basically selling bitcoin to usd and then buying back from usd to BTC.
How is this different?

neither, fiat is not involved at all

glancing at my browser i see that right now the average BTC/USD exchange rate is about $900

so, if you were to deposit 1 BTC into the site at this moment, you would be marked at depositing $900 worth of BTC

then, 24 hours from now, if, for some reason, bitcoin was listed at $450 per USD, then you could withdraw 2 BTC or $900 worth of BTC. if the price had changed to $1800 per Bitcoin, then you could withdraw 0.5 Bitcoins.  I guess that is how he is going to do it.  i could be wrong.  the idea is to at the moment of deposit, lock the price of your deposited bitcoins at the price for that moment, come back 24 hours later and no matter what the new price, recover your deposit at the old price, sometimes winning, sometimes losing.  I think that i am perhaps wrong about his methods he will use, because that doesn't work my way.  but, he intends for you to be able to deposit your BTC for a short period and guarantee that you will still get the same price as when you deposited it.

in the futures market, i contract with you to buy something like a cotton future at say, $79, 24 hours from now.  if the price goes up, you lose money, if the price drops, i lose money.

It is the same as bitcoin futures nominated in bitcoins. They already exist and you can buy them on bitcoins. It is just strange idea to implement it and somehow fee is not mentioned, but it is required in order to run such business. Also, in order to hedge your exchange risks you do not need to deposit full amount, in other words buying futures on certain amount require way less money than amount itself, in that way btc futures are better than your solution.

it is a ways in the future i think, he simply gave me the basics and i guessed at the techniques.  it is a bitcoin future, i think he wants the site to be a stepping stone to full on futures trading for those using it.  it definitely is a nice easy way to understand the concept with all the frills removed.  futures sites can be a mess to understand for most people.  i imagine if he does it right and then slowly adds a little more technology to the site that he can send people that have used the site a few weeks over to an actual futures site and there will be less culture shock.  even hardened marker traders, whether crypto or stock market can need a few minutes to take in a futures site.  not sure which is more complicated looking, a futures site or a forex site with the full candlestick...lol

You are right about that most people don't know what are futures in general. So if can make it easy to understand and use for general public I can totally see it working.

How's the site mantained?
Comissions?

An Insurance. In times of rising BTC: profit, in times of falling BTC: loss.
So basically it's a bet on rising BTC.
Hopefully your friend has enough BTC to cover the cost of falling BTC.

There are some evident drawbacks to this concept.

1) Given enough BTC and falling prices, this thing would get liquidated fast
2) How does your friend hedge against such a case?
3) How does one know that at least ones deposited BTCs are safe and to be returned in such a case?

Suggestion:

Make two of these portals.

moon.btcfutures.io
dead.btcfutures.io

The 1st one is what your friend planned. The 2nd is the inverse. It's like betting on black and red in the casino at the same time - you cannot lose. Oh wait...


Rico