Why should you purchase crypto derivatives instead of raw crypto?

Recently, a New York-based blockchain company finally got the approval from CFTC (US Commodity Futures Trading Commission) to function as DCO (Derivatives Clearing Organization). This approval is considered as a significant milestone in the crypto world as it implies a ‘Go’ signal to bring cryptocurrency trading to the real world. Also, it has kindled the interest of many institutional investors to shift their focus to invest in derivatives for bitcoins, Ether, and other digital currencies.

If you are new to cryptocurrency market, you may wonder what is the difference between raw cryptocurrency and crypto derivatives. Purchasing a raw cryptocurrency does not involve any kind of paperwork whereas derivatives involve a clear documentation and paperwork. A derivative is nothing but a contract that is agreed between two or more parties on any financial asset, security or index. Examples of derivatives are futures contracts, swaps, and options.
Institutional investors have two main concerns on investment in digital currencies. They are:

1. Storage and security
2. Legal regulations

For that, you need to how the digital currencies are bought and stored.

1. Legal regulations - Let us take the example of bitcoins. Typically, a bitcoin can be acquired or purchased using bitcoin exchanges like Coinbase. Most of the bitcoin exchanges are unregulated and do not follow any standards. Also, the transactions do not involve any kind of paperwork or documentation except it is stored in the blockchain. This makes the traditional bitcoin exchanges unsuitable for institutional investors.

2. Storage and security - To store the bitcoin, you need a bitcoin wallet. There are two types of bitcoin wallets: Hardware and Software. A software wallet can be easily installed on your personal computer or your mobile phone. You can protect your wallet with private keys and passwords. Software wallets are susceptible to virus attacks and theft by hackers. In both cases, it is impossible to recover your data. A hardware wallet involves the use of a physical device for storing the private keys and is more safer than software wallets. Bitcoin wallets are ideal for individuals whose scale of investment is limited. But Institutional investors need a much better storage for storing the derivatives.

To address the above main concerns, Cybetrust S.A has partnered with the premium crypto vault supplier Xapo to create a highly secure solution for buying and storing the crypto derivatives offline in various geographical locations which don’t have an internet access for security-related purposes. But these vaults are monitored 24/7 by highly skilled professionals.

Apart from security, Cybertrust provides ownership certificates for the crypto derivates by creating Global Crypto Notes (GCN). Every GCN will have an ISIN ( International Securities Identification Number). GCNs will be used to claim the digital assets. To learn more about the additional safeguard for the crypto derivatives, visit the whitepaper https://www.cybertrust.io/CyberTrust-WhitePaper.pdf

To acquire the Cybertrust platform, it is necessary to hold the CABS token which can be bought during the token sale starting in November 2017. To learn more about the significance of CABS token and information regarding token sale, please visit https://www.cybertrust.io/.