New Binary Options Trading Service Takes Bitcoin-Only Payments

Binary options offer an easy way to hedge bitcoin volatility and several operators stand poised to fill the demand.

AccessTimeIconMar 26, 2014 at 2:15 p.m. UTC
Updated Dec 12, 2022 at 12:45 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

A new service for financial options has launched a beta website for nine different binary options, including gold, silver and crude oil, plus six foreign exchange pairs.

The offered currencies – euros, Australian dollars, New Zealand dollars, British pounds, yen, and Swiss francs – are all paired with the US dollar.

Different than previous binary option offerings, the new service – which is called UpDown – processes payments and payouts in bitcoin only.

With binary options, the trader selects the direction that the price of the underlying asset will move – either up ('call option') or down ('put option') – and purchases an option contract. This contract gives the buyer the right to exercise the option at the end of the specified time period, at which point the trader makes a return or loses the initial investment.

are sometimes referred to as 'all-or-nothing options', 'digital options', or 'fixed return options' (FROs), which are traded on the American Stock Exchange.

More popular outside the US, foreign binary options are offered by individual brokers, rather than through an exchange, and they typically have a fixed payout and risk. The brokers earn their revenue from the percentage discrepancy between what they pay out on winning trades and what they collect from losing trades.

Most foreign binary options brokers are not legally allowed to solicit US residents unless that broker is registered with a US regulatory body, such as the Securities and Exchange Commission or the Commodities Futures Trading Commission.

First-generation brokers

First-generation binary options for bitcoin simply offer the BTC/USD currency pair as a trading vehicle, whereas second-generation operators also allow deposits and payouts in bitcoin. Coindesk first covered first-generation bitcoin binary options in June 2013.

Now, binary option brokers that trade bitcoin as an option instrument include anyoptionhttp://www.anyoption.com/binary-options-trading, SetOption, TradeRush, and Bloombex-Options.

Fast and simple, the tradeable asset lists are extensive with durations of 60 seconds to one week. Payouts range between 60% to 85%, depending on the asset and option type. Top brokers will also provide news resources and trading tools.

Second-generation brokers

Second-generation brokers offering both bitcoin funding and bitcoin trading include UpDown, BTCOracle, and BeastOptions.

The first such trading service operating on the bitcoin block chain, Satoshi Option, debuted in March 2013.

Similar to the SatoshiDice betting game, Satoshi Option requires no account registration and no personal details. Payouts are near instantaneous and the service is accessible from anywhere in the world because it relies on the bitcoin block chain as the platform.

Maximum trade size per bitcoin address is currently set at 0.25 BTC. Since the available commodities are traded with publicly available pricing, the binary option outcomes are verifiable.

Unlike the other bitcoin-funded brokers that rely on proprietary platforms, BeastOptions operates on the third-party TRADOLOGIC trading platform, which provides a customizable front end that is a lightweight, high-performance solution for web-based or mobile platform trading.

Several binary option trading platforms exist and SpotOption, TRADOLOGIC's biggest competitor, has been offering bitcoin binary options since mid-2013. Leverate's new platform also includes support for bitcoin binary options and CFDs, which is utilized by Plus500 and TopOption.

Contracts for difference, or CFDs, differ from binary options in that they allow the use of leverage and the contract can be closed at any time, whereas binary options have a fixed expiry. Counterparty risk is a concern for both instruments, which is what the very short-term binary options utilizing the bitcoin block chain seek to alleviate.

UpDown will soon be adding a BTC/USD trading pair to its binary option asset list after it negotiates an exchange partnership. UpDown refers to itself as a community-regulated project and is registered in the British Virgin Islands. As always, please perform your own due diligence on binary option brokers and trade at your own risk.

Disclaimer: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, CoinDesk.

Follow the author on Twitter.

Trading screen image via Shutterstock

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.