An Economics Education by Bitcoin – Part I

For those unfamiliar with Bitcoin, there are better ways to begin understanding it than this article; I'd recommend Wikipedia for starters. This article is intended for those who already think they know what Bitcoin is, but have not yet traded in it. I was there – I thought I comprehended it, too, but having since dipped my toe in the pond, I've discovered an unexpectedly enlightening experience. There are so many nuances involved in the trading of Bitcoin as to make it tremendously educational. It forced me to consider a lot of the built-in features which go unscrutinized and even unrerecognized in traditional treaties. In so doing, it made me assign my own values ​​to those features, and allowed me to decide the most favorable ways of satisfying my various needs – choices which are typically taken from us.

There are aspects of Bitcoin which make it similar to fiat currency, but it is not cash. There are aspects similar to gold, but it is not bullion. There are aspects similar to securities, but it is not exactly a security. The question of "What is it?" is actually much more complicated than it appears. It exists solely as an entry in a distributed digital ledger; "having" Bitcoins really means having authority to transfer Bitcoins. No, in fact, that's not even technically correct. It means having a degree of authority measured in Bitcoins to transfer that very same authority. Try to wrap your brain around that. Going forward, I'll resort to referring to Bitcoins as the thing of value which is transferred, but understand that my doing so is solely shorthand to make this essay readable. Having Bitcoins is the authority to transfer authority.

Thus, upon deciding to acquire my first Bitcoin, the first step was to determine how to attain authority to transfer Bitcoins. One could theoretically print out the cryptographic code of a Bitcoin and hand the paper to someone else as a means of transferring the Bitcoin represented by the code, but how would that recipient know that the printout had not been duplicated and already sent? For that matter, how would the recipient know that the printout even represented some value in Bitcoin rather than merely a string of random characters? Transferring printouts of Bitcoin on paper may work (albeit inefficient) between people who implicitely trust each other, such as for gifts among relatives, but the genius of Bitcoin is the distributed but authoritative nature of its ledger, and for that to work, transactions have to be exposed to its network.

If a Bitcoin printout is transferred around amongst a group of people without being exposed to the network, none of them would know whether it was valid or counterfeit. It would be like passing around a bank draft made payable to "Bearer;" it might have already been paid, or it might never have been good in the first place. No one would know until they tried to present it for payment at the maker's bank. As long as someone else is willing to accept a potentially-hot potato for goods or services, sometimes it does not matter, but people tend to be wary of ending up with hot potatoes. I am one such person, so I wanted my receipt of Bitcoins to be verified by the network. This turned my focus to a study of digital Bitcoin "wallets." Wallets are a digital place to store Bitcoin authority codes.

Source by Brian Blum

Low Risk Binary Options Trading

One of the consistent practices of binary options has been the lack of a low risk binary options trading alternative. The very nature of the contract stands essentially as an all or nothing enterprise in which the trader has effectively a fifty-fifty chance of losing his or her interest investment at contract outset. Here we explore a few ways to mitigate or otherwise reduce the riskiness of trading contracts of this type.

Alternative Strategy 1: Binary Hedging to Reduce Loss Risk

Many traders have opted to try to reduce the riskiness of these hybrid assets by opening positions initially and then closing the position once an initial (favorable) gap between the strike price and the current spot price has opened. This allows the investor to create a full or partial hedge of the initial trade resulting in a risk / reward profile that pays out a high return if the expiration price lands in the middle (the area between the initial and hedge strike prices) with a small loss or a push at any other price. This strategy requires double the investment capital of a single position and has the impact of reducing the overall probability of success but at the same time dramatically reducing per trade losses. Confident traders many times open such a position with the plan to close it off prior to trade lock out but choose to leave the contract open if it is deep in the money. A trader with a deep in the money asset has the luxury of that choice.

Using Bonus Cash to Reduce Risk

A second means of low risk binary options trading involves taking good advantage of the incentive account credits many platforms offer. Most brokers offer some form of either initial or long-term activity incentive to induce new clients to make their first asset purchases. Smart investors use this bonus cash wisely by making a series of smaller trades (usually hedged to double the volume) to slowly consume it. By generating enough trade churn (investing the money in the account over and over again) the typical restrictions on withdrawals of bonus cash can be lifted with minimized losses – again particularly if the hedging strategy above has been employed as well.

Trading Strategy 2: Sacrificing Yield with Early Closure or Floating Pair Binary Options

The last ways an investor can take advantage of low risk binary options trading comes in the form of either closing positions early or by trading a floating pair binary options contract instead of a standard one. Some brokers allow investors to close the money contract early – at a reduced yield. While the profit on this sort of transaction can be a bit lower, the advantages of quitting while you are ahead can not be understated.

Source by Steve B Wise