Binary Options Brokers That Deal In Bitcoin
Bitcoin may still not be a mainstream currency, but there are a lot more things you can do with it these days, including trading binary options. There are not a lot of brokers that accept Bitcoin for trading yet, but there are a few. If you aren’t familiar with Bitcoin, I will explain it to you and why you might want to consider trading with it instead of normal currency. There are benefits and drawbacks to using it, and it does constrain your choice in brokers. Alternately, you might want to consider trading Bitcoin options, which is not quite the same thing as trading in Bitcoin. There are a couple of brokers who offer you the choice of trading Bitcoin currency options, one of which is AnyOption, a brand we are familiar with.
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What Is Bitcoin / BTC?
Bitcoin (the plural is “Bitcoins,” but sometimes you will see it without the “s”) is a type of virtual currency with no associated paper bills. It was first described by a developer named (pseudonymously) Satoshi Nakamoto. He referred to it as a peer-to-peer electronic cash system. Bitcoin, unlike standard currencies such as US Dollars, Euros, Canadian Dollars, or British Pounds Sterling, is not managed by any central national bank authority. Instead, the creation and transfer of Bitcoin is done using an open source cryptographic protocol. “Peer-to-peer” here means that Bitcoin transfers can take place directly between computers and mobile devices without the intervention of a financial institution such as a bank or even a third-party payment vendor. Bitcoin transactions take place on servers known as Bitcoin miners, which ledgers all transitions into an archive in order to secure and legitimize them.
How is inflation dealt with? Right now, Bitcoins are being “minted” on a regular basis, but the number of Bitcoins created will be halved every 4 years until 2140, at which time Bitcoin production will entirely cease. At that point, there will be 21 million Bitcoins in the world. While Bitcoin is an attempt to try to empower people and generate a more organic economy, it receives criticism for its volatile exchange rate and the lack of flexibility in its supply, with some commentators alleging it is not a true currency because of these defects.
Why Trade In Bitcoin?
There are a couple of reasons to consider. The first is that Bitcoin transactions are pretty hard to tax. This is not to say that it is impossible or that you don’t still theoretically owe taxes on your Bitcoin transactions, because you do. In the United States for example, the Treasury Financial Crimes Enforcement Network sets rules for the use of Bitcoin, and the IRS will probably be catching up soon. In the United States, if you are issued a 1099 by a party you do a transaction with (including a broker), you will definitely owe taxes on that transaction, even if it is done using Bitcoins. You may temporarily benefit from the muddy waters and confusion surrounding the new virtual currency while trading, but you should familiarize yourself with the situation in your country and with your broker before you proceed.
The other reason that Bitcoins might interest you with reference to binary options trading is the fact that they are easy to keep separate from your main funds. You can’t buy or sell everything using Bitcoins. Try looking up items for sale for Bitcoins and you will find plenty, but the selection is still somewhat limited compared to what you would find in return for a traditional currency. While this may make Bitcoins sound less useful (and in some sense they currently are), it may help you to look at your Bitcoin account as a separate monetary account than your main bank account, which is presumably in US Dollars, Euros, or some other familiar currency.
It is important to learn how to make this distinction. It prevents you from constantly withdrawing from one account to fund the other. This is part of smart money management. You ultimately want to grow both your accounts, and you are not going to accomplish that by constantly removing funds from one to transfer to the other. Trading in Bitcoin may help you to think twice before attempting to convert one currency to the other to move money you should not be moving.
Trading Bitcoin Contract Options
As mentioned earlier, trading in Bitcoin is still quite uncommon, but you can trade Bitcoin options at a couple of different brokers nowadays. This is the same as trading any other currency contract, with Bitcoin as the currency. So for example, instead of being offered a High/Low or One Touch contract on USD or AUD, you might see a contract on Bitcoin. Since Bitcoin is a highly volatile currency, there are a lot of major movements on a regular basis, which means many different opportunities for profit if you are a trader who does well in markets where there is a lot of movement.
Brokers Dealing in Bitcoin:
- AnyOption – This is a broker with whom we are very familiar. AnyOption has a strong reputation and a lot of great features and are well worth checking out. This would be our top recommendation for Bitcoin trading at this point in time since we are less familiar with the other binary options brokers that take this currency. Note that this is a broker offering Bitcoin options to trade, not trading in Bitcoin. Your account will still be in a standard currency like EUR or USD, but you can trade Bitcoin contracts. Read our AnyOption Review here
- Satoshi Option – This binary options broker was of course named after Satoshi Nakamoto, and is a binary options platform specifically designed for trading with Bitcoin. Trade at your own risk here. No account is needed and you do not even need to provide personal information to trade. This is an actual Bitcoin-based trading site where you invest in Bitcoin and receive your payouts in Bitcoin. If you lose money, you lose Bitcoin. The options themselves include Bitcoin-based contracts and others. For example, you might see a contract on EUR/USD, but you also might see a contract on BTC/EUR (BTC = Bitcoin). While this broker offers an intriguing product with a lot of convenience and anonymity, we know nothing about their security or trustworthiness.
- IG Group – This binary options broker was the first to offer Bitcoin trading (the same variety as that offered by AnyOption), but as of May this year, they announced that they would not be offering Bitcoin trading anymore. No reason was given for the change. They simply referred to it as a “management decision” and left it at that. The reasons are pretty unclear, given that there should be no murky regulatory issues surrounding Bitcoin contract options (the real uncertainty would come from offering traders the chance to trade in Bitcoin).