Bitcoin appears to be a perfect medium to make it possible for investors from around the globe including the developing world to have access to profitable trading opportunities that would not be possible before the Bitcoin phenomenon appeared.
To become mainstream, Bitcoin should be used in all the ways one would use fiat – to pay for goods and services, to trade, borrow and invest to generate a return.
Unveiling profit opportunities
Bitcoin itself has established this revolutionary vision of a decentralized and constant movement of value, totally free from the control of any authority. So how can we unveil more profit opportunities while nourishing this precious characteristic?
For instance, using Bitcoins as a medium for trading stocks looks like a way to follow the vision of complete decentralization set by the cryptocurrency in the first place.
Marcie Terman, Founding Director at First Global Credit says:
“The point is to give people holding cryptocurrencies the same choices people investing with fiat currencies have always enjoyed. That is what is necessary for Bitcoin to become a true part of the economy. You need to be able to do everything you can do with ‘conventional’ currencies.”
First Global Credit has been founded with the objective of providing services that accept Bitcoin as a valuable asset that can be used to generate a return. The company has recently extended Bitcoin backed stock trading adding over 50 fast moving stocks from the Hong Kong Stock Exchange (HKEX) to those already available on the trading portal.
The stocks cover not only Hong Kong-based companies but will make it possible to hold positions in over 30 mainland Chinese companies that are traded on the HKEX. Stocks of Galaxy Entertainment Group, Sino Land Co, China Unicom Hong Kong, Lenovo Group and China Overseas Land & Investment Ltd are now available for trading through Bitcoin.
What can you trade in Bitcoin?
This innovation follows the successful addition of UK shares that were added to the site last year and became a contributing factor as to why the company saw a significant increase in trading of 350 percent in 2016 over the previous year.
“Stocks were a natural place to start because people understand them,” Terman says to Cointelegraph. “But diversification is both the strategy investors use and the way to manage risk. To start giving clients a range of choices we have added the United Kingdom, Hong Kong and Chinese shares to the US shares we were initially offering. We also offer trading other asset classes like futures, precious metals, energy, commodities, interest rates and stock indices.”
Futures are much more cost-efficient to use as an investment vehicle over CFDs, which is the only other way Bitcoin traders can access markets like precious metals and oil. First, Global Credit has also established a range of ETFs that give exposure to different locations like Brazil Small Cap Fund ETF, Mexico Market Index Fund ETF, UK, Italy, China, Russia and South Korea. And that allows diversifying and spreading a risk.
In addition to stock and futures trading, the First Global site also offers the Currency Switch service which allows Bitcoin to fiat trading with some significant benefits over ordinary Bitcoin exchanges.
“Currency Switch works on the premise that it does not matter if you are holding your trading collateral in fiat currency or Bitcoin,” Gavin Smith, CEO of First Global Credit, explains. “This allows clients to take advantage of Bitcoin price moves while simultaneously trading other markets.”
“If a trader identifies an impending decrease in Bitcoin price, they can quickly move their capital into dollars, sterling Swiss francs or euros without needing to cash out of their stock and futures trades,” continues Smith. “First Global clients have a distinct edge over other Bitcoin holders because they can extract profit from their capital in two ways at the same time.”
Advantages and risks of trading with Bitcoin
Trading with Bitcoin has its own advantages and risks. Obviously, managing counterparty risk is an issue in the Bitcoin space and it’s a wise trader that takes the time to understand the business model and policies before they start working with a company like First Global.
To ensure the security of client’s assets First global Credit actively grades Bitcoin exchanges based on a weighted set of criteria including whether the exchange is domiciled in a respected jurisdiction, the transparency of their management structure and finally the longevity of the exchange.
Once the acceptable counterparties have been identified, the company spreads assets across multiple exchanges thus creating a situation where the company keeps operating and continues to provide customers with service even if one of the counterparties fails.
Further risks are eliminated by minimizing the time that the funds are out of control through continuous moving funds out of exchanges when they are not actively used to trade.
Besides, the company doesn’t use the client’s Bitcoins to place trades. Part of the benefit of their model is that a client retains full ownership of their Bitcoins for their appreciation value while the company loans customer’s US dollars, Sterling or Hong Kong dollars so they can place trades on their behalf on the exchange.
“It’s not like a CFD Bitcoin company that may or may not hedge the client’s positions in the market,” explains Terman. “We hedge one-to-one so our customers can have confidence if the market does something strange we are not going to disappear with their Bitcoins because the positions are covered and the money will be available.”
“Also, accounts over 100 Bitcoins have part of their margin held in multi-sig Xapo wallets which is possible because of the structure of the trades,” continues Terman. “Our whole business model is focused on sustainability and that means being really attentive to the issues of counterparty risk, both in providing our client’s assurance and in how we manage the company’s money.”
Power and money are moving to the East
First global Credit is now serving growing numbers of traders in Africa and Latin America, as well as parts of Asia including Indonesia, Malaysia and Nepal. There is indeed a certain pattern showing that cryptocurrency is more widely adopted in certain jurisdictions where conventional market economies exclude all but the most wealthy participants.
Nowadays, Asian economies represent huge opportunities for Bitcoin initiatives for a number of reasons and we have already seen Bitcoin booming there. For a long time, the West has dominated the capital markets especially the US because of their control of the debt market through banks. This gave the United States advantages in terms of investment capital.
“This stranglehold is gradually being broken down, not only by cryptocurrency but through the direct assault by China and other disruptive market influences, therefore, we are seeing power and money move to the East,” clarifies Terman. “Companies in China and Hong Kong are much more aggressive than their western counterparts and this is creating an environment pitting the incumbents of the West against the aggressive strategies being used in the East.”
“It seems quite likely that the balance is changing,” notes Terman. “Our goal is to give clients access to both markets so they can make decisions for themselves.”
The “Bitcoin Project”
We have been watching the Bitcoin phenomenon for quite a while now and can’t stop wondering what does the future for it look like.
While there is an army of disbelievers claiming that the whole “Bitcoin Project” will gradually fade away, there is also a community of enthusiasts driving this project for unstoppable development. They strongly believe that in let’s say a decade from now we are going to have hard times finding a place accepting payments in traditional currencies.
Well, we are still a little bit too far from that moment, so let us look at how Bitcoin found a way to fit into the world of fiat currencies and other valuable assets.
Back in 2009, long before the currency had much of acceptance, only technically advanced people knew how to extract benefit from Bitcoin through the mining process. Later, however, we started to see the currency’s value increasing and businesses including Bitcoin as a form of payment for services and goods.
Numerous exchanges have mushroomed allowing to change their dollars and euros for Bitcoin and depositing your crypto fortune into investment plans for generating returns doesn’t seem odd anymore.
After all, we live in an era when most of our money is nothing more than numbers on our banks’ computers. In this sense Bitcoin isn’t that much different, is it?