Furus and Gurus Market Prediction Game: A Novel Approach to Speculation or Closer to Binary Options?
I wanted to have another narrative for the Furus and Gurus prediction game that is beyond the game just being a game and instead a financial instrument for everyone around the world. The purpose is to bring the traditional market to us instead of us going to them like the BitcoinEFT is doing. So I asked ChatGPT for answers to my question. Please note that this requires further research.
Me: Are you familiar with all the kinds of derivatives that exist in the stock market?
ChatGPT: Yes, I'm familiar with various types of derivatives in the stock market. Derivatives are financial instruments whose value is derived from the value of an underlying asset. Here are some common types of derivatives:
Me:
There is a game called Furus and Gurus Market Prediction games where players or market participants can open a contract. The contract can be open with the Furu Token, BCH, or mUSD a sort of stablecoin. So you can open contracts or games with 3 assets you can only close the contract in the asset that it was open.
Contract one.
You open a contract with the Furu Tokens as the settlement asset and you place a game or bet for 50 Furus, betting in the following asset BTC. Your first contract says that you think BTC will be worth $50 when the contract closes, a second participant comes and takes your contract and he or she places a bet that Bitcoin will close at $ 55 when the contract ends the price at closing is $52 so the player one wins. Player one wins his 50 Furus plus the 50 the other player places a total of 100 Furus.
Contract two.
Player One places a bet for 50 Furus at $50, and Player Two at $52.51. That contract will close in 24 hours by the time the contract closes price of BTC is $52.51. So player 2 wins his 50 Furus plus the other player's 50 Furus for a total of 100 Furus.
Contract three.
Player One places 50 Furus at $50 and Player to at $55. Price closes at $52.5 so the contract returns both players their respective 50 Furus bets.
What kind of derivative this contract is? They are not using BTC as the underlying asset and the value of the Furu token in BTC or USD is not important.
ChatGPT
Based on the description provided, it seems like these contracts resemble a form of prediction or betting contracts rather than traditional derivatives. In these contracts, participants are making predictions price of Bitcoin (BTC) and placing bets using different assets (Furu Tokens, BCH, or mUSD) as the settlement currency.
The key characteristics of these contracts include:
Participants Betting on BTC Price: The primary focus of the contracts is on predicting the future price of Bitcoin (BTC) at the time of contract closure.
Use of Different Settlement Assets: Participants can open contracts using Furu Tokens, BCH, or mUSD, but the contract is settled in the same asset in which it was opened. For example, if the contract was opened with Furu Tokens, it is closed and settled in Furu Tokens.
Winning and Losing Bets: Participants place bets on the expected BTC price, and the winner is determined based on the actual closing price. The winner receives the total amount of Furus placed in the bet.
These contracts do not fit neatly into traditional derivatives categories like futures or options because the underlying asset is not being bought or sold. Instead, participants are making predictions value of an asset (BTC) and placing bets.
In summary, these contracts appear to be a form of prediction or betting game rather than a traditional derivative.
Me: Okay in the stock market or traditional market are there betting derivatives or betting contracts?
ChatGPT
In traditional financial markets, there are no direct equivalents to betting contracts or derivatives explicitly designed for gambling purposes. Financial markets are primarily designed for investment, risk management, and hedging rather than for speculative betting. However, certain financial instruments and markets may resemble aspects of betting, especially in the realm of derivatives. Here are a couple of examples:
Options Trading: While options are commonly used for risk management and speculation, they might be compared to betting in some contexts. In options trading, an investor can make speculative bets on the future price movements of an underlying asset without owning the asset itself. Options provide the right (but not the obligation) to buy or sell an asset at a predetermined price within a specified timeframe.
Binary Options: Binary options are a type of financial option where the payoff is either a fixed amount or nothing at all. Traders speculate on whether the price of an underlying asset will be above or below a specified price at a certain time. The binary outcome (either a win or a loss) can resemble the win-or-lose nature of betting.
It's important to note that while there might be similarities in certain aspects, the key distinction is that traditional financial instruments and markets are regulated and designed for legitimate investment purposes, whereas betting typically involves games of chance and is often subject to different regulatory frameworks. Investors and traders in traditional markets are generally expected to make informed decisions based on analysis and research, rather than relying on chance or luck as in pure betting scenarios.
Me: According to what I described before could the same fall into any of the traditional betting markets and if yes in what kind? Maybe Binary Options?
ChatGPT
The contracts you described share some similarities with certain aspects of binary options trading. In binary options, traders speculate on whether the price of an underlying asset will be above or below a predetermined strike price at a specified time. The outcome is binary, with a fixed payout if the prediction is correct and a loss if it is not.
In your described contracts:
Participants are making predictions price of Bitcoin (BTC).
The contracts have a binary outcome: either one participant wins, and the other loses, or it results in a tie (both participants get their respective bets back).
These characteristics align with the basic structure of binary options, where the outcome is based on a yes/no proposition related to the price movement of the underlying asset.
While your described contracts don't fit precisely into traditional binary options trading, they share some conceptual similarities. It's important to note that binary options trading is a regulated financial activity, and the contracts you described seem to have more of a gaming or betting nature. Traditional financial markets and binary options trading are subject to specific regulations, and participants are expected to adhere to legal and regulatory frameworks.
If you are considering engaging in such activities, it's advisable to be aware of the regulatory environment in your jurisdiction and to ensure compliance with any relevant laws. Additionally, seeking professional financial advice is recommended.
Conclusion.
The game doesn't fit exactly the definition of Binary Options but it is closer to Binary Options than the other financial instruments and it remains in essence a betting game. This could mean regulations could fall into gambling rules and regulations so you better not ask for permission.