The CME Group, the most innovative exchange ANYWHERE has filed for a patent on a derivatives system that would allow cryptocurrency miners to offset their risks. Now folks, we know this is a little outside the norm for most investment managers' lexicon, but we encourage you to stay with us on this story, as the CME is doing some of the most innovative digital product development on the planet.
As we have previously mentioned, they are working with British firm CryptoFacilities to provide futures contracts against bitcoin trades. Though not currently available in the US, this will eventually come to American shores and it will be a game changer for digital currency trading. They have also launched two indexes with CryptoFacilities to provide unified pricing for bitcoin, which previously has been highly dispersed.
The CME is also working with Britain's Royal Mint on rolling out "RMGs" later this year - a digitized gold product that will trade in forex markets against the US dollar, the Euro and the British Pound and be transacted over the blockchain. Again, and incredibly innovative product, and the digital gold behind this "coin" will be backed by actual gold in the Royal Mint's vaults.
Now we hear word that this new patent will offer digital currency miners the opportunity to offset their mining costs with derivatives - essentially insurance - as we all know derivatives are.
There's no shortage of brains and innovation at the CME's digitization group, headed by ingénue Sandra Ro, and this exchange is by far and away creating the most innovative new financial products of any exchange on the planet. So, if you don't fully understand this post, not to worry - just keep watching what the CME is up to in digitization and you'll get a pretty good inkling as to where the future of finance is headed.
(Cindy Taylor/Publisher)
"The company recently published a US Patent & Trademark Office (USPTO) application describing a comprehensive system for a derivative contracts system allowing cryptocurrency miners to offset risk.
'While there is financial risk involved in mining operations, because of the potential rewards, Bitcoin miners undertake these risks hoping that the value of the mined Bitcoins will exceed the miners' costs and provide a reasonable return on investment.'
- CME Group
While mining costs are generally known upfront, estimating income generated by a mining operation can be extremely difficult. There is uncertainty involved in predicting how many bitcoins a given mining computer will mine over time, uncertainty in terms of how much the mined bitcoins will be worth in terms of legal tender (e.g. USD), and uncertainty in trying to predict what the Bitcoin difficulty factor will be in the future..."
Source: Bravenewcoin