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Deribit Review - is it scam or safe?

Deribit Review - Is deribit.com scam or safe cryptocurrency exchange?

RATING: 3.6 / 1 REVIEWS ForexBrokerz Deribit

RECOMMENDED BITCOIN BROKERS


Trading Accounts & Conditions

 

Account type Leverage Maker Fee Taker Fee Deposit fee
Futures 1:50 -0.02% (rebate) 0.05% Bitcoin only, Free
Options 1:10 0.04% of underlying or 0.0004 BTC* 0.04% of underlying or 0.0004 BTC* Bitcoin only, Free

*fees can’t go above 20% of the value of the given option.

 

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 pice. Before going further, we feel the need to mention, 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. Here are the full specifications:

 

The contract specifications for futures trading at Deribit(click to zoom)

 

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. Here is a preview of the options board at the time of writing (some of the experienced readers may not appreciate the pricing and spreads):

 

The options board at Deribit

 

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. We see this as 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.

 

How one trades at Deribit

 

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). We didn’t manage to find such a connection.

 

We came to the conclusion after the recent ESMA statements, which clearly state cryptocurrencies aren’t classified as financial instruments, but derivatives based on them are and should be regulated. While this has vast implications for CFD brokers, futures and options obviously fall in this category. As a comparison, Crypto Facilities (which offers a very similar service) is overseen by the UK’s Financial Conduct Authority (FCA).

 

>>Learn more about Bitcoin and CFDs<<

 

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 proceede.

 

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.

 

>>See where you can buy Bitcoin with a credit card<<

 

 

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 our, 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 and what we saw, Deribit seems like a legitimate trading venue. Just to underline one more time, this is a relatively complicated way of trading, which we wouldn’t recommend for beginners.

 

Those of you looking for a safer and simpler way to speculate with Bitcoin, should consider forex brokers. Some of them have started offering Contracts for Difference (CFD) on digital assets. That being said, there are a lot of scammers in the field, so be sure to look for a reputable company.

 

>>Regulated Bitcoin CFD brokers<<

 

Here is a recap of Deribit:

 

Pros Cons
Company is transparent Not regulated, while offering derivatives
95% cold storage + 2FA Complicated trading system
Futures and options available Only BTC related products
Trading fees are competitive Accounts held in Bitcoin
No deposit or withdrawal fees No fiat payments
Relatively high leverage offered  
Decent platform, great charting  
   

 

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Traders` reviews for Deribit

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