Firmo

Hello Steemians and Steemers.
Firmo, hmm what do I know, what can I write @originalworks's : I guess I do more of learning in contest and thanks to @originalworks have learnt much.

What's Firmo?

For those out there like me who knew nothing about Firmo, Firmo is a blockchain based platform that aims at building infrastructure for the crypto economy industry. The platform uses the smart contract language to enable secure execution of financial contracts on the blockchain. With a domain language, the FirmoLang, users from all over can compose secure smart derivatives that are compatible with any major blockchain.

According to the official website, the international financial product market for things such as futures and derivatives moves substantial value every day. The website continues, “Derivative financial contracts are created and executed by financial intermediaries, but in the exponentially growing cryptocurrency universe. Currently, there is no safe way of offering or executing these products and the traditional derivative providers are not meeting the huge demand for advanced cryptocurrency derivatives.” The aim if the platform is to solve this issue.
Yes they're solving this issues already by offering users a safe and secure way to create bullet-proof, trustless financial contracts. The unique contract engine coupled with domain-specific language offers users an unmatched degree of security, safety, and ability to translate the platform contracts into smart contracts.

Now what are derivatives?

A derivative is a financial security with a value that is reliant upon or derived from an underlying asset or group of assets. The derivative itself is a contract between two or more parties based upon the asset or assets. Its price is determined by fluctuations in the
underlying asset . The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes.
Derivatives can either be traded over-the-counter (OTC) or on an exchange . OTC derivatives constitute the greater proportion of derivatives in existence and are unregulated, whereas derivatives traded on exchanges are standardized. OTC derivatives generally have greater risk for the counterparty than do standardized derivatives.
Note: the above is explained according to 'investmetopidia'

derivatives are used for hedging , or insuring against risk on an asset. Derivatives can also be used for speculation on the future price of an asset or in circumventing exchange rate issues. Example: a Crypto currency investor purchasing steemdollar (using Nigeria nairas) would be exposed to exchange-rate risk while holding that steemdollar. To hedge this risk, the investor could purchase currency futures to lock in a specified exchange rate for the future sale and currency conversion back when selling.

Types of Derivative

1. Future contracts
2. Forward contracts
3. Mortgage-backed security
4. Credit derivative
5. Swaps
6. Options

I will give examples to explain few of the above listed derivative.

1. Future Contracts: Futures contract is an agreement between two parties for the sale of an asset at an agreed upon price. Futures contract are use to hedge against risk during a particular period of time.

Example: If on May 2nd, 2018, #ronarexx owned 8,000 steemdollar which were then valued at $5 per steemdollar. Fearing that the value of his steemdollar would decline, #ronarexx decides to arrange a futures contract to protect the value of his steemdollar. #hr1, a speculator predicting a rise in the value of steemdollar agrees to a futures contract with #ronarexx, dictating that in one year’s time #hr1 will buy #ronarexx 8,000 steemdollar at their agreed-upon value of $5, If the value of #ronarexx steemdollar declines, his steemdollar is protected because #hr1 has agreed to buy them at their May 2nd 2018 value, and if the value of steemdollar increases, #hr1 earns greater value on the deal, as he is paying May 2nd, 2018 prices for steemdollar in 2nd, November 2018. Six months later, November 2nd rolls around and steemdollar is valued at $14 per steemdollar. #hr1 has benefited from the futures contract, purchasing steemdollar at $9 less per steemdollar than if he would have simply waited until November 2nd 2018 to buy steemdollar. While #ronarexx, on the other hand, has speculated poorly and lost a sizable sum.

1. Forward contracts: forward contracts are similar to futures contracts, the key difference between them is that unlike futures, forward contracts (or “forwards”) are not traded on exchange, rather only over-the-counter.

2. Options: An option is an agreement between two parties giving one the opportunity to buy or sell a security to the other party at a predetermined future date. Note: in option, the buyer is not obligated to make the transaction if he or she decides not to, the buyer has an option.

https://steemit.com/crypto/@originalworks/200-steem-40-bonuses-sponsored-writing-contest-firmo
firmo2018