Do you trust your broker? If not, you are not alone. Over 30% of traders worldwide do not really trust their broker with their money. But what choice do they have? There might be a solution to arm yourself against roque forex brokers and binary option brokers: Spectre.ai. A platform where you trades are matched to trades from other traders and are fulfilled by blockchain technology.
What is Spectre.ai?
Spectre.ai is the world’s first broker-less trading platform, and is using this method to combat the pressing issue of broker manipulation and spoofing. Spectre.ai is a broker-less platform like this one has been built on top of the Ethereum blockchain, all while utilising smart contracts to carry out specific functions. Because Spectre is a broker-less platform and is built on the Ethereum blockchain, it is using decentralised technology and instead of shrouding everything behind closed doors like traditional brokers, everything is out in the open without the need for an intermediary to get in the way. When a trader deposits money and initiates a trade on a platform, the whole transaction and settlement occurs behind the scenes, however with Spectre’s broker-less decentralised platform, every transaction is mined and is settled visibly on the global Ethereum blockchain and can be verified.
What is Spectre.ai?
This is really an important point because Spectre.ai is the first platform which has effectively
removed your traditional A-book brokers against which you are trading against. Meaning, recently when binary options were really popular you were trading against the balance sheet of the broker and this creates a range of conflict of interest and a range of moral hazard related issues.
Now that Spectre.ai have basically replaced a broker with a smart contract it's a platform which effectively creates a very fair trading environment.
In a centralized brokerage scenario the first thing a trader needs to do is to deposit money at the brokers operating account which is normally a bank account. When that happens it's a giant leap of faith that the trader is trading with the broker and that the broker will honor their withdrawals if the trader has made money. As well that the broker will give fair entries and exits and that the broker won't manipulate the trader’s account by trading on it or attaching Auto traders (trading bots) and signal services. So with Spectre.ai everything rests in the hand of a human.
The problem with the traditional A-Book model is that when a trader is trading they are effectively taking trades against the brokers balance sheet because the broker has to provide liquidity. Meaning that the trader doesn't feel there's no one else there to trade against them, so effectively the broke provides liquidity the problem this creates.
That means that when the trader wins, the broker loses. When the trader loses the broker makes a hundred percent profit on the loss of the trader. This scenario is what has happened and that you have an industry loss ratio of over 90 percent in binary options. That is on the A-book side of Forex trading: very large loss ratios. And effectively there's a lot of financial fraud.
How does Spectre.ai use the blockchain?
With the Spectre.ai platform you are using the blockchain basically to remove the broker but not remove the essential functions. For example the ability to interface and trade with the market.
Traders in the platform are not trading by depositing money with Spectre.ai, they're not a deposit-taking institution that's a very important point. You're trading directly from your Ethereum wallet or your on-site private escrow which is effectively linked to a smart contract - you're not depositing money with Spectre.ai and that's a huge paradigm shift versus traditional off-the-grid trading.
No price manipulation
The price feeds are imported to the Spectre.ai system from an independent third-party data provider and then we can massage them, because that's what brokers will do. The price feeds are going directly from the independent third party data provider to independent verification services and then those feed rates are imported into the smart contracts in Spectre.ai. So there's no way the Spectre Team can manipulate price entries.
These are two major things Spectre.ai’s doing on the blockchain. What Spectre is effectively doing is to provide a decentralized liquidity pool which effectively is a bag of money. Obviously it's not just about your money it's protecting a range of security protocols.
Note that you have no access to this pool as well as Spectre.ai and you or they can't withdraw funds from it.
It's purely controlled by smart contract so that's basically at the use case for the blockchain.