Crypto Derivatives

September 7, 2021

Make buying, selling, and trading Cryptocurrency derivatives easy with Rubix’s industry-leading cryptocurrency exchange platform. Get started by creating your own virtual Rubix Swap Wallet.

What are Cryptocurrency Derivatives?

Cryptocurrency derivates are securities or contracts that can be exchanged between two or more parties. They are generally bought and sold for a predetermined amount, which makes them useful for hedging, or risk management. As the name suggests, their values are derived from traditional cryptocurrencies such as Bitcoin. Because cryptocurrencies are decentralized, or not maintained by any federal agency, their values tend to be volatile, which can make crypto derivatives risky. However, the ability to predetermine buying and selling prices can offset some of that risk.

How do Crypto Derivatives Work?

Crypto derivatives rely on regular cryptocurrencies to determine their value. For instance, the value of a Bitcoin derivative will only increase if the value of Bitcoin (BTC) increases. They offer access to the exciting crypto market without requiring traders to actually own cryptocurrency.

How do you Trade Crypto Derivatives?

To exchange a crypto derivative, two or more parties will mutually agree on the buying and selling price ahead of time. They may also agree on a date or time frame for the exchange to take place.

What is the Best Platform to Trade Cryptocurrencies?

When trading cryptocurrency, you need a site that guarantees speed and efficiency while securing your assets. Rubix is an online cryptocurrency exchange platform that connects users to a network of fellow crypto-owners for peer-to-peer transactions. Not only does Rubix verify the identity of each user, but we also protect users through an encrypted platform and multi-security system. If your assets were ever at risk, they would be converted to your native currency and cashed out automatically. Get started with safe, swift exchanges by signing up for your own Rubix Swap Wallet.

Crypto Derivate FAQs

What are Bitcoin Derivatives?

Bitcoin derivatives are tradeable contracts or securities that are valued based on the current valuations of Bitcoin. They allow owners to participate in the Bitcoin exchange without actually owning Bitcoin.

How are Crypto Derivatives Valued?

Crypto derivatives are valued based on their namesake cryptocurrencies. For instance, if you hold a BTC derivative, you can only make money if the value of BTC increases. The precise value of your crypto derivative depends on which derivative you own.

What are Examples of Crypto Derivatives?

There are different types of crypto derivatives that you can invest in. The most common ones are:

  • Futures: Futures are a standardized agreement in which both parties will buy or sell the asset at a predetermined price and date. They are typically traded on exchanges.
  • Forwards: Like futures, forwards are agreements made between two or more parties. However, the specific details are personalized between the exchangers. Moreover, they’re traded over the counter (OTC) as opposed to a formal exchange, which makes them riskier.
  • Options: These are contracts that give the buyer or seller the ability to either buy or sell an asset at a predetermined price within a specific time frame.
  • Swaps: Swaps involve an agreement to exchange one type of currency for another in the future. These generally come with interest.

Are Cryptocurrency Derivatives Bad?

Like all forms of virtual currency, cryptocurrency derivatives come with their own advantages and disadvantages. On the plus side, crypto derivatives offer a way to participate in crypto exchanges while reducing the risks involved with traditional cryptocurrencies. For instance, Bitcoin is known to be incredibly volatile because it’s not maintained by the government or a centralized organization. Crypto derivatives help reduce the volatility of cryptocurrencies by making buyers and sellers agree on a predetermined price.
However, it’s important to keep in mind that crypto derivative exchanges, particularly OTC exchanges, comes with their own risks — the complicated nature of derivative agreements can be difficult to navigate.

Get Started

When trading cryptocurrency, it’s always advisable to use a reliable platform that promotes efficient exchanges while protecting against cyber-attacks. With its convenient virtual platform, direct transaction model, and high level of security, Rubix makes trading cryptocurrency easier than ever. Get started with crypto derivative exchanges by visiting Rubix and creating your own crypto wallet.