How Crypto Derivatives Products Reduce Counterparty Risk

Exposure to counterparty risk only comes with a lack of understanding of the security and custody infrastructure of the counterparty – in this instance, the exchange. Another way to reduce counterparty risk is to use crypto derivative products, making them a popular option amongst seasoned and risk averse traders. Derivatives allow traders to speculate on Bitcoin or other digital assets, without exposing 100% of their capital to counterparty risk. Reducing Counterparty Risk with BitMEXLet’s say a trader has 100 XBT of capital. This means through XBTUSD, the trader is only exposing 1% of their XBT capital to counterparty risk.