Bites Of Trading Knowledge For New TOP Traders #18 (short read)
Bites Of Trading Knowledge For New TOP Traders #18
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What is the Blockchain? -
The Blockchain is a decentralized ledger that is append-only meaning that data can only be added to it. Once information is added, it is extremely difficult to modify or delete it. The Blockchain enforces this by including a pointer to the previous Block in every subsequent Block.
The pointer is a Hash of the previous block. Hashing involves passing data through a one-way function to produce a unique Fingerprint of the input. If the input is modified even slightly, the Fingerprint will look completely different. Since the Blocks are linked in a Chain, there is no way for someone to edit an old entry without invalidating the Blocks that follow, allowing a secure structure.
What Is a Blockchain Consensus Algorithm? -
A consensus algorithm is a mechanism that allows users or machines to coordinate the agreement of what is a valid block in the Blockchain in a distributed setting. It needs to ensure that all participants in the system can agree on a single source of truth. Types of consensus algorithms include Proof of Work (PoW) and Proof of Stake (PoS).
What is Proof of Work? -
Proof of Work (PoW) is a mechanism for preventing the same bitcoin funds from being spent more than once. Proof of Work consists of a consensus algorithm, which is a protocol that sets out the conditions for what makes a block in the Blockchain valid. It ensures the security and integrity of bitcoin’s distributed ledger.
RISKS AND OPPORTUNITIES FOR CORPORATES AND INDIVIDUAL INVESTORS -
Common application of financial market instruments for managing risk and opportunities.
Hedging Portfolio Risk
Hedging bitcoin exposure with the Bakkt ® Bitcoin (USD) Cash Settled Monthly Futures (BMC) contract is a way to manage portfolio risk by taking a directional position opposite to the underlying asset as protection.
For example, a hedger may have plans to hedge downward price movement in bitcoin using futures contracts based on in-house market and portfolio analytical processes. The market analysis may use common technical analytical techniques such as support and resistance to formulate the trade decision.
If bitcoin is expected to weaken as it nears the resistance area, the hedger may plan to enter into a short futures position using the Bakkt ® Bitcoin (USD) Cash Settled Monthly Futures contract under either price levels of $27,500 or $32,500 to lock in the value of their underlying bitcoin position. Alternatively, if the hedger was in a short bitcoin position and wanted to hedge their position as price rose, entering a long futures position above price levels $12,500 or $16,500 could be considered.
TRADDICTIV · Research Team
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Disclaimer:
We do not provide investment advice, nor provide any personalized investment recommendations and/or advice in making a decision to trade. Before you start trading, please make sure you have considered your entire financial situation, including financial commitments and you understand that trading is highly speculative and that you could sustain significant losses.
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What is the Blockchain? -
The Blockchain is a decentralized ledger that is append-only meaning that data can only be added to it. Once information is added, it is extremely difficult to modify or delete it. The Blockchain enforces this by including a pointer to the previous Block in every subsequent Block.
The pointer is a Hash of the previous block. Hashing involves passing data through a one-way function to produce a unique Fingerprint of the input. If the input is modified even slightly, the Fingerprint will look completely different. Since the Blocks are linked in a Chain, there is no way for someone to edit an old entry without invalidating the Blocks that follow, allowing a secure structure.
What Is a Blockchain Consensus Algorithm? -
A consensus algorithm is a mechanism that allows users or machines to coordinate the agreement of what is a valid block in the Blockchain in a distributed setting. It needs to ensure that all participants in the system can agree on a single source of truth. Types of consensus algorithms include Proof of Work (PoW) and Proof of Stake (PoS).
What is Proof of Work? -
Proof of Work (PoW) is a mechanism for preventing the same bitcoin funds from being spent more than once. Proof of Work consists of a consensus algorithm, which is a protocol that sets out the conditions for what makes a block in the Blockchain valid. It ensures the security and integrity of bitcoin’s distributed ledger.
RISKS AND OPPORTUNITIES FOR CORPORATES AND INDIVIDUAL INVESTORS -
Common application of financial market instruments for managing risk and opportunities.
Hedging Portfolio Risk
Hedging bitcoin exposure with the Bakkt ® Bitcoin (USD) Cash Settled Monthly Futures (BMC) contract is a way to manage portfolio risk by taking a directional position opposite to the underlying asset as protection.
For example, a hedger may have plans to hedge downward price movement in bitcoin using futures contracts based on in-house market and portfolio analytical processes. The market analysis may use common technical analytical techniques such as support and resistance to formulate the trade decision.
If bitcoin is expected to weaken as it nears the resistance area, the hedger may plan to enter into a short futures position using the Bakkt ® Bitcoin (USD) Cash Settled Monthly Futures contract under either price levels of $27,500 or $32,500 to lock in the value of their underlying bitcoin position. Alternatively, if the hedger was in a short bitcoin position and wanted to hedge their position as price rose, entering a long futures position above price levels $12,500 or $16,500 could be considered.
TRADDICTIV · Research Team
--------
Disclaimer:
We do not provide investment advice, nor provide any personalized investment recommendations and/or advice in making a decision to trade. Before you start trading, please make sure you have considered your entire financial situation, including financial commitments and you understand that trading is highly speculative and that you could sustain significant losses.
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