The Next Generation of Futures Trading

Thanks to the advent of blockchain technology, the Digitex Futures Exchange has adopted several cutting edge features, giving them a headstart in technological innovation. Let’s review a few of these features.

Commission-Free Futures Trading is Quickly Becoming a Reality

One hundred years from now, people are going to look back on the first two decades of the 21st century and quickly realize that this was a great time to be alive, particularly as it relates to new disruptive technologies and innovation solutions. We’ve only just started to scratch the surface. We are still in the infancy stage of blockchain technology and digital currency usage. To borrow a term from the aviation industry, this is the “Kitty Hawk” stage of the cryptocurrency movement. Tremendous opportunities await traders, investors and entrepreneurs in the digital currency and blockchain universe.

One of the companies shaking up digital currency futures trading is Digitex, which will provide commission-free futures trading of Bitcoin, Ethereum and Litecoin.

Digitex was founded and developed by Adam Todd, a former pit trader at the London International Financial Futures and Options Exchange (LIFFE). Todd developed Digitex to satisfy his desire to have a trading platform which would allow him to pursue short-term trading strategies without facing the extraordinary costs associated with high volume trading. 

Unique Features and Benefits of the Digitex Futures Exchange

In terms of owning a futures trading account, customers have always been uncomfortable with the idea of their margin money being held by the various futures exchanges. For example, if you own a soybean futures contract, the margin money is removed from your account and placed on deposit with the futures exchange. The safety of your money is 100% dependent on the financial health of the exchange. Digitex eliminates this conflict by using non-centralized state channels on the Ethereum Blockchain to manage your account balance. The Digitex exchange does not hold your funds, which completely removes the possibility of Digitex freezing or mismanaging the funds in your account. 

The uniqueness of the Digitex Futures Exchange is further enhanced by the fact that Digitex has its own native cryptocurrency, called the DGTX token. All trading profits and losses are denominated in DGTX tokens. Additionally, account balances, deposits and withdrawals are denominated in DGTX tokens. Therefore, traders must own the tokens in order to trade on the Digitex Futures Exchange. Of course, this is what creates the underlying demand for the DGTX tokens.

Another feature which separates Digitex from traditional exchanges is the way in which the firm manages your private information (name, address, SSN, DOB, etc.). Traditional brokerage firms and futures exchanges must follow strict KYC/AML regulations. Originally, these regulations were designed to prevent the opening of fraudulent accounts. However, the Know Your Customer (KYC) rule has proven to be extremely ineffective and rather pointless. In fact, an argument could be made that KYC/AML has actually increased identity theft, as futures exchanges are a favorite target for hackers seeking personal information. 

Digitex can completely avoid the possibility of identity theft. How?

Because they don’t collect personal data in the first place. Hackers are not interested in pursuing Digitex because there is nothing to hack!

An additional unique characteristic of the Digitex Futures Exchange is the fact that it enhances market liquidity by using automated market makers. Essentially, these market makers are automated trading bots with algorithms which are designed to break even. The sole purpose of the trading bots is to create liquid futures markets that have tight bid and offer spreads.

These are just a few examples of the manner in which the Digitex Futures Exchange is setting the standard for a new futures trading platform based on blockchain technology. As we discussed earlier, this is just the beginning. We are still in the first inning in regard to the blockchain’s ability to unleash new and exciting ideas in the area of financial innovation. Without question, Digitex Futures Exchange is laying the groundwork in order to play a major role going forward.

Personal Observations

I’ve been actively involved in the futures markets for 29 years. I took my first commodity futures trade on 16 March 1989, in the soybean oil market. My account was with a Chicago based brokerage firm called Lind-Waldock, one of the first discount brokerage firms to arrive in the futures industry. The commission rate on my soybean oil trade was $22 per round-turn, which was considered a low rate in 1989.

The futures industry has definitely evolved over the years. Arguably, the biggest change during the past several decades has been the transition from pit trading to electronic trading. Electronic trading was first introduced on the Chicago exchanges in 1992, with the launch of CME Globex. However, electronic trading was extremely unpopular during the early years, particularly among the pit traders in Chicago and New York. Electronic trading did not gain universal acceptance from the general public until the early 2000s. These days, 100% of all futures trading is electronic. The good old days of pit trading are gone forever, relegated to the dustbin of history.

Based on historical observations, the futures industry does not have a great track record in terms of adopting new and innovative technology. Instead, the industry has always preferred to remain locked in the status quo, somewhat resistant to change. This type of industry-wide mindset could actually be quite beneficial to an innovative trailblazer like the Digitex Futures Exchange. Digitex has an opportunity to establish a strong presence in terms of using the blockchain to develop a commission-free trading exchange, while the “old school” exchanges slowly enter the blockchain arena. Digitex could be miles ahead of the competition, as other exchanges are slow to adapt.

Thanks to the development of blockchain technology, this is a great time to be involved in the futures industry. As traders and investors, we will have a front row seat as we watch solution makers like Digitex become the “gold standard” of commission-free futures exchanges.

Today, we are entering a new era within the futures industry, thanks to forward-thinking entrepreneurs like Adam Todd and his entire Digitex team. Quite frankly, I can envision the day when all commodities are available for trading on a commission-free exchange like Digitex. This would include commodities like grains, precious metals, energies, meats, interest rates, currencies and foods. Going forward, I would not be surprised if the Digitex Futures Exchange rolled out additional futures contracts. However, for now, Adam and his group are making the wise decision to concentrate on perfecting the trading of Bitcoin, Ethereum and Litecoin.

As I mentioned at the beginning of this article, this is a great time to be alive in terms of technological innovation and new disruptive forces, which will completely alter the way we conduct our daily lives. The most exciting part is that we are still in the early phases of this transformation process. Certainly, the team at Digitex will do its part to move the needle forward in the area of commission-free futures trading.

Brief Summary of the Digitex Futures Exchange

  • We are still in the infancy stage of digital currencies and blockchain technology.
  • Several unique features and benefits separate Digitex from other crypto exchanges.
  • Digitex is a commission-free exchange.
  • Digitex uses non-centralized state channels on the Ethereum blockchain.
  • The smart contract is used to hold customer account balances.
  • The Digitex Futures Exchange has its own native currency, the DGTX token.
  • Customers are not required to follow KYC/AML procedures when opening an account.
  • Digitex employs automated trading bots in order to enhance market liquidity.
  • The Digitex Futures Exchange launching in Q4 (2018).
  • Digitex can take advantage of this situation by expanding its presence in the blockchain.
  • The Digitex Futures Exchange will become the “gold standard” within the industry.

Excited for the Digitex commission-free exchange to launch? Be sure to join our waitlist and get early access. Click on the link below, and be sure to share this with your friends!

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