At a time when a lot of users are complaining about security, particularly, after several instances of Bitcoin being stolen by hackers, TeraExchange is promising for higher security for its customers. To provide higher security in Bitcoin derivative trading, TeraExchange, a swap execution facility (SEF) for Bitcoin, has partnered with Bitcoin security platform BitGo.
According to the press release from the firm BitGo will provide multi-signature Blockchain-based custodial services for USD/Bitcoin swaps executed on TeraExchange. Nonetheless, the organization believes that the relationship means it is the first to allow its market participants to collateralize Bitcoin derivative trades.
Talking to media professionals Christian Martin, CEO and co-founder of TeraExchange said that his organization is addressing an ease of use issue for an existing and important subset of market participants, the natural hedgers. According to him, the concept of “custodial services” isn’t easily addressed by most wallet architectures.
However, according to him BitGo, to their credit, worked with his company over the past few months to create solutions to the point where his organization and BitGo both feel confident bringing this service to the marketplace. Similar views came from BitGo CEO Will O’Brien why said that while common to the traditional financial world, such custodianship models have yet to permeate the Bitcoin exchange sector.
Security Ranks among Higher Priority for Traders
He informed that the model is not new to the financial world, to the swaps world, it’s not new to the executives at TeraExchange and it is new to the Bitcoin industry. According to him, it is finally catching up to what the financial world knows, which separation of custodianship from exchange operation is.
Christian Martin on the other hand is of the opinion that the deal is quite significant. According to him, it is one that would open up new firsts for the Bitcoin industry as for him, historically USD or other fiat currencies, US Treasuries and investment grade debt has been used to collateralize trading activity.
He also added that now in addition to XBT being included in that menu of collateral – this is also the first time that the block chain is serving as the collateral repository for a regulated product on a regulated exchange. However, according to him it is not a replacement; rather a complimentary solution that creates more options than traditional third-party custodial services.
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