Deribit

[mlawson71]

Deribit, which comes from the words derivative and Bitcoin, is exactly as the name suggests a platform for trading cryptocurrency derivatives.  Client accounts are only held in Bitcoin, while a reference index (taken from several exchanges) is used to determine the price. Here it should be mentioned that this isn’t a beginner friendly service.
 
Deribit Advantages

Company is transparent – Deribit is running since the summer of 2016 (according to their website) and being operated from the Netherlands. The team behind the project is not afraid to publicly show themselves and features a former options trader from the Amsterdam Exchange along with the math/tech guys.

95% cold storage + 2FA – when it comes to security, Deribit applies two of the most popular features. Cold storage, means the coins are kept in wallets, which can’t be accessed online and even if a hack occurs, nobody will be able to steal them. Two-factor authentication (2FA) is a system, which connects your account and smartphone (via an app) to protect your funds, even if somebody learns your log-in credentials.

Futures and options available  – Deribit is not your typical cryptocurrency exchange, where one coin is traded for another. Derivatives are rather complicated financial instruments and the particular ones offered by this exchange may not be suitable for newcomers to the world of trading.

Futures are offered pretty much how you would expect, with monthly expirations. There price index is taken from several of the most popular exchanges – Bitfinex, Bitstamp, GDAX, Gemini, Itbit and Kraken.

Options are European style (meaning they can’t be executed before expiration, unlike the US style ones) and short-selling is apparently allowed. Keep in mind the latter carries a theoretically unlimited risk.

Trading fees are competitive  – the costs of trading at this exchange are in-lien with the offers from other similar trading venues. Deribit is close to Crypto Facilities in terms of the fees on futures contracts (-0.02% and 0.05, compared to -0.03 and 0.05, for makers and takers)

No deposit or withdrawal fees – this trading platform doesn’t charge users anything for making a payment to and from the exchange. As we mentioned in the beginning, all transfers are done in Bitcoin and the appropriate mining fees will obviously apply.

Relatively high leverage offered – with a maximum of 1:50, Deribit allows traders to gear up quite heavily. That being the case, we would advise against over-gearing, as the consequences of a margin call (liquidation) aren’t pleasant. The fees are slightly higher, but at least a portion of them goes to a compensation fund, used to cover the losses of bankrupt traders.

Decent platform, great charting – The platform at Deribit is solid. That is the best word to describe it, as there is nothing revolutionary here, but at least all of the features one would expect are there. The charting package provided is by TradingView, which is always seen as very nice.

Demo trading available – given the complicated nature of this product, it’s nice  Deribit offers a demo trading environment. That being said, it isn’t advertised clearly on the front page of the website and one must go to the FAQ section to learn about it.

Deribit Disadvantages

Not regulated, while offering derivatives – most companies in the cryptocurrency space aren’t regulated and the key reason for that is the lack of a law under which they should register. That being said, Deribit is a derivatives exchange, based in the Netherlands, which means they should be overseen by the Autoriteit Financielle Markten (AFM). There doesn't seem to be such such a connection.

Complicated trading system – experienced futures/options traders will have no problem in understanding what is happening at Deribit. Someone who has just bought his first Bitcoin and hasn’t traded on traditional markets will have to read a lot (and probably watch a tutorial video), before feeling confident enough to proceed.

Only BTC related products – probably the biggest disadvantage of this derivatives exchange, when compared to other similar ones, which have also included Ripple (XRP) and Ethereum (ETH).

Accounts held in Bitcoin – while this feature will attract crypto enthusiasts, it may serve as a deterrent for old school traders (who prefer having a USD balance). The mere BTC volatility will cause fluctuations in the value of your investment with this company, even if you don’t actively trade.

No fiat payments –   Deribit does not allow you to make a cash transfer and get some Bitcoins in exchange. This isn’t that surprising, as most of the more complicated trading facilities don’t. That being said, there are a lot of “entry level” companies, which usually accept Bank Transfers or Credit Cards.
 
Conclusion

Deribit is a Dutch cryptocurrency derivatives trading platform. They provide Bitcoin futures and options, while account types are also in the most popular cryptocurrency. The costs of trading and actual interface seem competitive.

Still the biggest issue with them is the fact they aren’t regulated, while the EU legislators require derivatives (even the ones based on crypto) to be. The company may be in touch with the AMF and looking for a solution, as full oversight may not be appropriate. Other than that, judging by the user comments Deribit seems like a legitimate trading venue. Just to underline one more time, this is a relatively complicated way of trading, which isn't recommend for beginners.