In an official announcement, Bitcoin options trading platform provider LedgerX has stated that it has launched a new kind of binary contract for Bitcoin. It is called the LedgerX Halving Contract (LXHC) and is essentially a wager on the date of the next halving occurrence.
For anybody who doesn’t know, Bitcoin goes through a “halving,” once in 4 years, which implies that block rewards are halved. The next occurrence should happen in approximately 473 days, or technically, after another 68,276 blocks, according to the Bitcoin Block Reward Halving Countdown.
Since block height is determined and not date, the exact time of the occurrence can fluctuate. This is what constitutes the LXHC’s basis. Investors essentially bet on the date on which the halving occurs. The announcement is as follows:
“This contract will allow you to get a fixed payoff if the next halving block (#630,000) 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.”
The statement explains that binary contracts are usually linked to events that would either result in a winning/losing event types, such as sports and elections. However, Bitcoin offers a different scenario because the halving event will certainly happen, but no one is sure when. The announcement says:
“To give an analogy, 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 and operations. Bitcoin miners face this exact risk approximately every 4 years for the block reward that they earn.”
It appears to be a bit risky, but certain traders may be ready to take the challenge.
