US-based regulated futures platform LedgerX introduces a new type of contracts that are said to be unique to bitcoin.
As the company stated in the report, the announced contracts called LedgerX Halving Contract (LXHC) will actually represent a binary option, which means that there are scenarios a user can either get a fixed amount of money or nothing, that settles when Bitcoin halves the next time.
The bitcoin network is reportedly developed in such a way that this halving happens once every four years. The halving is a networking event in which the miners' reward for a new block within the bitcoin blockchain declines 2-fold. The previous halving was recorded in 2016 since then miners can receive only 12.5 BTC for a new block instead of 25 BTC.
"This contract will allow you to get a fixed payoff if the next halving block (#630,000) happens before a certain date and time. If the block is discovered after, the contract expires at zero,” LedgerX explains. Given the relevant network data, the next halving is expected on May 25, 2020.
Although binary options have always been seen as gambling, "bitcoin is unique in that there is a fundamental economic risk that is binary". In the current circumstances, miners realize that the number of BTC mined will halve one day in 2020. But the exact date is yet unknown. As a result, it might impact long term investments as well as operations but might bring new opportunities for the market participants as well.