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The application of blockchain technology is become widespread as the days go by and financial derivatives are now on the list of areas blockchain will improve. In fact blockchain is already improving them.

Derivatives are contract types that have their value derived from financial assets (financial security, such as a stock) that have been agreed upon. The question now is how does Blockchiain get in the mix? This can be achieved by changing the concept of derivatives from conventional finance and bringing blockchain into the system. This brings us to blockchain derivatives.

Blockchain derivatives can be said to be financial derivatives that have their value derived from blockchain assets instead of financial assets.

Cryptocurrency and other blockchain based assets can be used as far as blockchain derivatives are concerned.

Also, blockchain technology can be used to better conventional financial derivatives by eliminating the need for banks, mediators or third parties, to manage the derivative transactions. A blockchain based program known as smart contract will ensure that the parties involved are guaranteed complete transparency in any transactions carried out. Transactions will be open and secure and also payment will be automated.

Blockchain technology will also work to increase cost effectiveness in derivatives, reducing the excessive charges with come with banks and other third parties in the system.

Blockchain contracts will be miles ahead of conventional financial derivatives, and sooner or later, financial institutions that refuse to get carried along will be left behind in this process of advancement.

In the nearest future, blockchain technology will be part and parcel of every system and financial derivatives will not be left out. If it is not blockchain contract, it is no contract at all.