New Money

Want to Short Bitcoin? Derivatives Trading ‘Coming Soon,’ Say Exchanges

It seems like more and more investors are jumping in on the sport of Bitcoin speculation; with so much potential volatility, there’s plenty of money to be made buying and selling BTC. Even professional foreign currency traders think so! We’ve been impressed by the sophistication of the Bitcoin economy so far, but at the same time there’s a clear contingent of Bitcoin-naysayers who think the idea that a chunk of code goes for $13 or so means we’re looking at a big fat Bitcoin bubble and would love to short the market. So it seems like only a matter of time before the 8-bit traders start innovating more complex digital financial instruments.

Ruxum, a Bitcoin exchange launched last week by a former Citigroup vice president, is considering brokering short sales and other derivative transactions. But not just yet, founder Chad Pankewitz told Betabeat in an email. 

“Basically, I think that many other pieces of the Bitcoin economy are much more important before USD focused complex derivative products,” Mr. Pankewitz wrote. “It needs greater adoption and more frequent usage among both individuals and businesses around the globe. It needs to be easy to buy and sell Bitcoin around the world in people’s local currency. It also needs to be easy for businesses to accept, process and deal with Bitcoin. Then the Bitcoin economy will grow and these many markets will get Bitcoin / local currency convertibility, depth and liquidity.”

Ruxum has had “a couple” requests for short selling but it’s “not seeing massive demand” for Bitcoin derivatives, Mr. Pankewitz said.

The major Bitcoin exchanges stick to strict buy/sell transactions, but that hasn’t stopped bearish Bitcoiners from negotiating short sales person-to-person, where the short seller takes a loan with the agreement to pay it back at market price on a certain future date. But the ClearCoin Escrow app allows for Bitcoin options trading (UPDATE: A commenter pointed out that ClearCoin is shut down.) The Chile-based Tradehill exchange has a teaser on its homepage: “Advanced Trading Coming Soon: Margin trading to leverage your profits. Option trading to help you hedge.” Mt. Gox, arguably the most prominent Bitcoin exchange despite a highly-publicized flash crash, is also promising that derivatives are on their way.

Follow Adrianne Jeffries on Twitter or via RSS. ajeffries@observer.com

Comments

  1. Joe says:

    ClearCoin is no longer in business so no, no options trading thru them.

  2. Compbtcexchange says:

    Correction: Tradehill is based in the US and Chile. Their CTO and other programmers sit in an office in the San Fran valley.

  3. Compbtcexchange says:

    “Wall Street Level Security” – They pay for the same $40 dollar scan used by Tradehill and CampBX. The claims people are throwing out are ridiculous.

  4. Anonymous says:

    Interesting graphic here shows a possible correlation between google search term popularity of “bitcoin” and the closing price of bitcoin … http://www.internetsecuritydb.com/2011/08/bitcoin-price-vs-google-search-trend.html
    the google search popularity seems to lag the price by a week or so.