Bitcoin is an internet native commodity whose properties are revolutionary in their application. At LedgerX, the team has built a foundation with a nuanced understanding of these characteristics, culminating in a business model that is already seminal in its approach.
LedgerX consists of both a licensed derivatives exchange and a custody/clearinghouse under one roof. Traditionally, clearinghouses are independent entities, contracted by trade participants to enter both sides of a trade, and guarantee delivery of the goods based on contract specifications. This entity is vital for minimizing risk and friction and ensuring a counter-party is not stuck with the cumbersome task of tracking down the other side of the trade to receive their goods.
The first of these clearinghouses came with the onset of the 18th century at the Dōjima Rice Exchange in Japan. At the time, rice was being used as alternative money in Japan and clever entrepreneurs realized there were markets to be made with speculators hedging against inclement weather and market irrationality. From their warehouses, rice vendors began to offer receipts for rice deliverable in the future, with these receipts subsequently trading on the secondary market.
If two parties strike an agreement at a market exchange to buy three hundred pounds of rice in a month, the rice won’t materialize in a rucksack at expiration without a contract ensuring it, and somebody enforcing that contract. To mitigate this risk, clearinghouses custody physical assets and keep track of credits and debts based on contract terms.
If the purchaser wasn’t planning on consuming the rice himself, it was far too cumbersome to physically remove it from the warehouse. In return for custody, the clearinghouse charged a premium for its service and maintained collateral requirements to promote trust and attract new business. Explicitly, the physical settlement and custody of the asset were separated from the actual exchange due to high barriers of physical custody and clearing.
Today, the model separating agreement and execution exists in all but one institutionally scaled commodities exchange in the United States. That exchange is LedgerX, which both provides the trading platform as well as an asset clearing and custody. This frictionless system has gone through extensive vetting and safeguard controls by the CFTC and independent agencies.
To post the monetary equivalent of one Bitcoin in oil, it would take around 225 barrels. Not something that can be done through a computer. LedgerX was built by a team that understands Bitcoin's value proposition and unique permissionless and low cost potential as a settlement asset. With this in mind, the team took on the colossal effort necessary to achieve licenses for custody and exchange.
Collateral on the Omni Platform can be posted with Bitcoin 24/7/365. Once onboard, participation is as simple as sending a Bitcoin transaction and waiting for six confirmations. When you withdraw from LedgerX, physically possessing the asset takes only the execution of a transaction. When you begin trading on LedgerX, you will find a seamless and frictionless platform, supporting a sophisticated clientele and designed specifically around the cornerstone asset of the information age.