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Is Margin Trading the recipe for getting crazily rich in the digital assets industry?

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Is Margin Trading the recipe for getting crazily rich in the digital assets industry?
Source: Bibox

Margin trading has seemed to become the catchphrase of this cold winter.

Leverage, originally a concept of physics, has been introduced into economics and finance. The essence of leverage is loan. Users can borrow funds from the platform via margin trading that is several times the amount of their own assets and use it for investment so that they are able to use small funds to incite large funds so as to earn more profits.

However, it is worth noting that while users amplify their transaction amounts and obtain higher returns, investment risks that they are facing will also be increased. Despite the high risks, many users with aggressive risk tolerance are willing to use leverage instruments, with hopes of inciting larger funds so as to achieve higher returns. For instance, Bobby, the leading actor in the American TV series “Billions”, once used leverage to obtain huge profits by shorting the market.

With the development of cryptocurrency, the concept of leverage has also been introduced into the field of cryptocurrency. At present, major mainstream exchanges have launched leveraged products, including Bibox, the first ever AI enhanced encrypted digital asset exchange.

 Bibox, in April 2018, launched margin trading, providing users with up to 3 times leverage. In addition, Bibox has established “margin accounts” for users who are interested in margin trading so as to facilitate their management of margin funds.

Users who want to utilize “margin trading” can transfer funds as appropriate to their “margin accounts” at any time. The platform shall determine users’ loan amount based on the amount of funds that users have transferred into their margin accounts.

Bibox exchange Co-Founder Aries Wang told the reporter that “the main purpose of doing so is to isolate users’ margin accounts from their primary accounts so as to ensure the security of their funds.

Margin trading on Bibox is essentially peer-to-peer transaction. Lenders offer loans on the platform and set interest rates. Users who need loans can choose the appropriate “lender” according to their actual situation. Bibox only serves as an information intermediary and borrowers and lenders are free to transact. The platform only charges a service fee and does not engage in lending and borrowing. All activities of borrowing and lending as well as interest rates setting involved in margin trading transactions are performed by users themselves.

In terms of interest rate setting, Bibox, as an information intermediary, does not set interest rate limits for users, but gives an interest rate range: 0.01% to 0.1%, which means that the minimum rate of interest is 1/10,000 [the lowest of all exchanges]. Lenders are free to set interest rates within this range. The time period for each loan on Bibox is 7 days. If a user finds that 7 days is too short, he or she can enable the “repay and renew” function, which means that after 7 days, the loan can be automatically renewed.

The advantage of this peer-to-peer model is that users can, based on their own borrowing needs, find the most cost-effective way of borrowing on the platform.

For example, user A wants to borrow 3 BTC. On the platform with a fixed interest rate of 0.1%, the interest for one day may be 0.003BTC (3*0.1%=0.003BTC); on Bibox, the default is that the interest rate for lending starts with the lowest daily rate of 0.01%. In this case, the daily interest rate for user A on Bibox is 0.000876BTC (0.24*0.02%+2.76*0.03%=0.000876BTC). Thus, it can be concluded that Bibox is a platform that is more suitable for users who prefer margin trading.

As of now, margin trading on Bibox has reached a proportion of 100%, which means that anyone who borrows from this platform can get the loan he or she needs.

As we all know, high returns are bound to come with high risks. In order to reduce risks, all platforms are sparing no effort to prevent the occurrence of margin call. Bibox, which is widely known for its safe trading, is no exception. Bibox is recognized to be one of the safest exchanges in this industry. In terms of risk control, Bibox has adopted a dual approach.

First of all, before margin trading starts, all users who want to engage in margin trading need to, based on their actual needs, transfer funds to their margin accounts, which are separate from their primary accounts. And none of users’ following margin trading are performed via their primary accounts, which ensures that users’ primary accounts will never be susceptible to closeout stemming from the use of leverage;

Secondly, in the process of margin trading, Bibox has adopted an early warning mechanism. When the amounts of users’ margin trading have shrunk to 110% of their borrowed amount, in order to ensure that borrowers’ assets are safe, borrowers’ assets will automatically be closed out by the system at the current highest price on the market. In addition, in order to ensure that the closeout price is objective and fair, the price index on Bibox is not merely based on the price index of Bibox alone, but based on the price information of CoinMarketCap, CoinCap, Binance, Bitfinex and Bibox, and a weighted index is thus calculated.

For instance, user A, whose margin account only has one BTC, wants to trade with leverage on Bibox, after using a 3 times leverage, can borrow 2 BTC from the market. In the end, user A can use 3 BTC for asset allocation. Suppose that the interest on the loan is 0.1%, when user A’s assets has shrunk to 2.2BTC, a margin closeout will be made.

Finally, in terms of risk control, Bibox introduced the concept of “insurance”, the main purpose of which is to help users transfer and divert some of the risks. Users who have chosen this service need to give 10% of their interest on lending to the ad hoc investor protection fund set up by the platform. In case of the unfortunate event of closeout, the platform will use the fund to compensate for users’ loss arising from the closeout.

For the time being, most major exchanges have incorporated the trading instrument of leverage into contract transactions. Currently, Bibox has not launched an online contract transaction, but based on the information that Aries Wang gave to the media, Bibox will also launch a perpetual contract transaction in the near future. As of now, regarding the details of the perpetual contract, no news has been released yet.



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Guest Post

Legislation of Casinos: Places that are taking steps towards complete Legalization of Gambling in 2019

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Legislation of Casinos: Places that are taking Steps Towards Complete Legalization of Gambling in 2019
Source: Pixabay

More and more people are seeing any form of gambling as morally acceptable. In a 2009 poll by The Gallup, only 58% of people in the US seem to accept this industry. With an update for 2018, the percentage has raised to 69%.

There could be multiple reasons why people still have different opinions about gambling, whether it’s through the form of playing a casino game online or in any establishment or betting on any sports and games. Opinions could be formed because of a person’s religion, income, and race, and educational attainment.

The legalization of gambling could also affect how people see it. With more and more places all over the world taking steps to legalize any form of gambling in their area, people are becoming more accepting of this industry. In here are some note-worthy updates about the legislation on gambling all over the world.

Regulation of Online Gambling in Ontario, Canada

Any form of gambling was made illegal in Canada half a century ago and it was in 1969 when the provincial and federal government of the country were allowed to host lotteries. Then in 1985, each province was then allowed to legalize any form of gambling that they choose.

With all of those updates on Canadian law regarding gambling, there wasn’t really anything that targets online gambling until recently, when a press release from the Canadian Gambling Association [CGA] was spread.

With this, online gambling laws in Canada seem to be taking its shaped. CGA has noticed how much Canadians, particularly in Ontario, has been wagering on online gambling websites outside the country. More than $500 million are spent by the people of Ontario in gambling each year.

Because of this, CGA and the local government see the need to have their country put in place an online regulated system to allow their citizens to place wagers on any gambling sites safer. For now, the CGA is looking forward to taking part in the government’s planned dialogues with this industry’s stakeholders.

Pennsylvania’s Online Gambling Launch

Pennsylvania will be the fourth state in the US to launch and legalize online casinos. It was previously announced that PA online casino and poker servers should be up in at least the first quarter of 2019.

However, because of the recent DOJ interpretation of the Wire Act of 1961, the PA’s Gaming Control Board decided to delay the launch for a bit.

It is expected that most online casinos in PA will then be launched in mid-2019, where the earliest target date is in mid-June. This was as instructed by the PA’s Gaming Control Board, and they expect online casinos to comply.

For now, if you’re in PA but can’t wait to play online casino games, you can check the top betting sites online. There are some casino sites that can give you insights about the best casinos you can find on the web. This site will also let you know whether an online casino will accept bettors from your place.

Remote Gambling Bill in the Netherlands

Like a lot of European countries, the Netherlands is deemed lax when it comes to their laws about gambling in any form. However, before 2012, when it comes to online gambling, the Dutch community seems to be restricted about playing casinos online.

Back then, the Dutch people are allowed to place their bets online, but this was only through local servers, which at that time was limited. However, even if more and more websites are starting to get based in the Netherlands, there are still Dutch people who’re place their bets on foreign casino websites that go unnoticed.

Because of this, a bill was submitted to allow Netherland’s government to issue licenses to foreign websites and let them legally accept wagers from the Dutch citizens.

On the 19th of February, the Netherland’s senate placed votes on the Remote Gambling Bill, which already passed the Ditch parliament three years ago. The result was much anticipated and is now good news to foreign online casinos.

Sometime next year, the Dutch government will start to issue online gambling licenses to foreign casino websites and end the monopoly of online gambling in the country. Analysts shared that the process of issuing online gambling licenses might start in January 2021.

Next year may only be the start of application requests from foreign and local stakeholders. The only problem that some foreign casinos that may have to face are the “cooling period”. This is a proposal by the Dutch Minister of Legal Protection that would not allow operators who have been accepting bets from the Dutch citizens prior to the legalization for two years.

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