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There is no debt on good exchanges that offer crypto derivatives. Exchanges automatically close your positions when your margin balance nears zero. The best one
by wickoff 7y ago
There is no debt on good exchanges that offer crypto derivatives. Exchanges automatically close your positions when your margin balance nears zero. The best one - bitmex.com - has a 250 million insurance fund to cover the potential losses in case the price action becomes too volatile and there is not enough liquidity to close out everyone's positions in time.
Everything is seamless for the user, they don't even need know how leverage works, it's no different from trading on any other exchange.
- Sahhaese 7y agoYou're right, in that situation you're not borrowing from others, you're borrowing from your own capital. That said, it is a little different, because without margin you can ride out any position, but with margin you get margin called (liq'd) at increasingly smaller deviations. Or in another view of it, it does the equivalent of turning low-return 1:1 odds into high return 100:1 odds which further attract problem gamblers. Watch the rekt bot for a while and tell me that there aren't a lot of problem gamblers on mex.