- LedgerX unveils a new type of contract based on the date of the next Bitcoin halving
- The contract will allow you to get a fixed payoff if the next halving block happens before the listed date and time.
LedgerX, a very popular Bitcoin options trading platform has announced that they will be unveiling a new type of binary contract for Bitcoin. It has been termed the “LedgerX halving contract” and will be basically a bet on what will be the date of the next Bitcoin halving. Anyone not new to this space must know that “Halving” is an event that occurs every 4 years. In simpler terms during a halving the block rewards get reduced by half.
The next Bitcoin halving is supposed to be after another ~68,000 blocks. It is determined by the block height and so the exact date cannot be predicted. This is what LXHC is all about. The investor has to predict the date of the next halving. The blog states:
“This contract will allow you to get a fixed payoff if the next halving block (#630000) happens before a certain date and time. If the block is discovered after, the contract expires at zero. The result is an extremely clean binary payoff that is verifiable by all participants – a great demonstration of the value of a public Blockchain.”
Using betting to gauge sentiment
LedgerX further explains that the usual binary contracts are tied with win/lose kind of events, like a sports game where a team can either win or lose. Bitcoin on the other hand offers a unique scenario because this scenario will surely happen but nobody knows exactly when. The team further clarifies this by stating a simple example:
“Imagine you are an oil producer such as Exxon Mobile and know that one day in 2020, the number of barrels of oil you extract will go down by half, forever. But you’re not certain which date that will be. This would materially impact planning for investment operations. Bitcoin users face this exact risk every 4 years for the block reward they earn.”
Proof of concept
The team hopes to present various other contracts around the currently projected date of halving since there will be various other opportunities where an investor can profit from. This seems a bit risky but most of the people into binary options like taking risks because the potential rewards are great, even in a stagnant market. The team has also posted details and circulated the contract specifications to the market participants. The Specification states that there will be a total of 5 different expirations. If the halving block is mined on or before the timestamp expiration the buyer of the contract receives 100$, if not, then the buyer receives 0.