Systems and methods for decreasing counterparty settlement risk
Apparatus, systems and methods improve efficiency in transacting a swap or other futures based financial instrument, by using time-weighted index averages to decrease counterparty settlement risk. In preferred embodiments related to Bitcoin and several other cryptocurrencies, the swaps are based upon a time-weighted index average (D wa ) of multiple instances of difficulty (D x to D y ) of mining the cryptocurrency over multiple time periods (P x to P y ) where both Ds and Ps are available from the decentralized public blockchain. Traders can use these time-weighted index averages in conjunction with the anticipated values of Ds and Ps for the remainder of the duration of the index, to calculate the index value at any given time.
1 . A method of improving efficiency of a computing machine mining digital assets on a blockchain, comprising operating the computing machine with computer-executable instructions that when executed cause the computing machine to execute the following steps:
producing an index based in part on tracking, via blockchain data, a time between multiple instances of a difficulty change (D x to D y ) of mining a first digital asset recorded on the blockchain over multiple time periods (P x to P y ), where x is at least 1 and y is at least 2, and wherein the difficulty change of mining the first digital asset is related to a global hashrate of the first digital asset stored on the blockchain;
providing an operator of the computing machine blockchain-verified access to the index; and
the operator changing allocation of the computing machine mining the first digital asset thereby improving the efficiency, based at least in part on the blockchain-derived index.
2 . The method of claim 1 , wherein at least one of the time periods (P x to P y ) is a consecutive block of 24 hours.
3 . The method of claim 1 , wherein P x is a time period beginning at a commencement of buying or selling a financial instrument.
4 . The method of claim 1 , wherein P x is a time period beginning at least one day after a commencement of buying or selling a financial instrument.
5 . The method of claim 1 , wherein changing allocation of the computing machine comprises at least one of (i) switching the computing machine from mining the first digital asset to mining a second digital asset or (ii) reducing the computing machine mining the first digital asset.
6 . The method of claim 1 , wherein the index provides a heavier weight to higher values of x.
7 . The method of claim 1 , wherein a financial instrument refers to the index, and the financial instrument comprises a futures contract.
8 . The method of claim 1 , wherein a financial instrument refers to the index, and the financial instrument comprises a cash settled futures contract.
9 . The method of claim 1 , wherein the first digital asset comprises a cryptocurrency.
10 . The method of claim 9 , wherein the index is further based in part on a period function of a global hashrate of the cryptocurrency.
11 . The method of claim 1 , wherein the computing machine is in communication with a clearinghouse processor that executes orders for a financial instrument.