Bitcoin derivative exchange BTC.sx has accepted 500 BTC (approx $240,000) of funding from Seedcoin, a Bitcoin startup incubator.
BTC.sx lets users place leveraged bets on the BTC/USD price, supporting both long and short positions. Deposits and account holdings are only denominated in bitcoins. Their product is CFD-like in the sense that no bitcoins or dollars are actually exchanged. Profits and losses, however, are calculated by a complex formula that includes the squaring of “points” and the inverse value of the closing price. The following illustrates a sample long position of “0.005 BTC per point”, which requires a deposit of 5 BTC:
Thus, the proportion of leverage itself is dependent upon multiple factors, and grows in proportion to losses but shrinks in proportion to gains.
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The investment comes as the exchange continues to report strong growth, stating in its announcement that it has now brokered over $44 million worth of trades since inception, which is to be expected due to its highly leveraged trade structure. Earlier this year the company added new features to the platform and expanded its management team. Said Joseph Lee, Co-Founder and CEO of BTC.sx:
“This investment by the Seedcoin Fund is a testament to the proven growth – and validation among our users – for the distinctive platform BTC.sx offers. Our double-digit expansion in transactions further underscores this point: That we have a secure, reliable, fast and transparent means of facilitating Bitcoin-only trading of derivatives. We welcome this relationship with Seedcoin, and look forward to a profitable relationship between BTC.sx and Seedcoin.”
For Seedcoin, whose fund is traded on Havelock Investments, this is their 6th bitcoin-denominated investment. Eddy Travia, Co-Founder and Chief Startup Officer of Seedcoin, said:
“Seedcoin is proud to support BTC.sx and its talented team of professionals. This investment represents the most significant financial commitment, to date, by the Seedcoin Fund. In fact, this opportunity gives Seedcoin a substantial position in the most reputable, popular and advanced derivative trading platform for Bitcoin. We congratulate BTC.sx on their continued success and the global respect they have earned among Bitcoin traders.”
The advent of funding with BTC and trading the funding companies themselves in BTC is part of a larger push to get the cryptocurrency mainstream- both in practice and in people’s minds. It also can create a positive loop, whereby increased usage raises its value, thus increasing potential earnings by companies traded with it.