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Tuesday, 02 September 2014 00:00

Chinese Exchange Huobi’s Fixed-Return Product Sells Out in 1 Hour, Here's How To Roll Your Own Featured

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Coindesk reports: Huobi’s Fixed-Return Financial Product Sells Out in One Hour

Huobi has sold all subscriptions to 'Dig-VC', a 60-day fixed-term product designed to fund its new mining platform. The latest product from the Beijing-based exchange, which is effectively a bitcoin ‘certificate of deposit‘, is called ‘Dig-VC‘ and offers a guaranteed interest rate for investors. Notably, returns are backed by Digcoin – a new bitcoin mining services platform built by Huobi.

For the less financially inclined in the audience, the important issue here is the credibility of the entity issuing the guarantee. Digicoin is your counterparty and the source of both counterparty and credit risk!

Both will form part of Huobi‘s Hong Kong-based trading and investment platform BitVC, which launched in June. Dig-VC subscribers will see a guaranteed return of 1.2% per month (which equates to an annualised rate of 16%), calculated on a daily basis and paid at maturity. Additionally, the first 100 subscribers will be rewarded with an additional 0.2% per month at the end of the 60-day term.

The interest-bearing product differs from ‘cloud mining’ shares offered by other companies, in that subscribers are not purchasing shares of the hashing power with return rates that vary according to the growth of the network. Instead, Dig-VC promises a simpler investment with a fixed return rate.

Huobi describes Dig-VC as “an attractive new high-yield, low-risk financial product” and offered 2,000 subscriptions for 1 BTC each, beginning this morning China time.

I'm afraid there is no such thing. Risk is the price of reward, and you must pay some risk to receive some reward. In other words, beware when someone offers you something for nothing!

A company representative told CoinDesk all the shares were sold within the first hour, with more than half sold in the first two minutes. There was also a large amount of international interest:

“It looks like 70% of investors were from China with the rest coming from the United States, Canada, Australia, Japan, Singapore, and Thailand.”

It's interesting that there was so much interest for a product with such a high risk profile (which is evident by the 16%+ annual return offered in a ZIRP [zero interest rate policy] environment). Anyone who feels they missed out in not getting in on this deal can easily roll their own high yield bitcoin investments. As a matter of fact you can get creative and take either side of the trade. If you're bullish on high yield bonds, bearish on high yield bonds, bullish or bearish on BTC prices, you can construct the vehicle that best suits your tastes.

To go high yield via BTC, see below. 

How to Creating a high yield vehicle based in Bitcoin

See The Easiest, Fastest Way To Short Bitcoin in order to do a similar setup without high yield bond market exposure.

This CNBC/Max Keiser video clip is now so appropo!

Now, all you need is the know how, which my team and I have provided in abundance over the years...

Go to the 4:00 mark...

Click here to download the UltraCoin client.

 

Read 3781 times Last modified on Tuesday, 02 September 2014 13:20

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