Crypto glossary
Binary options
Binary options pay a fixed amount if a yes-or-no price condition is met at expiry and nothing otherwise; many platforms offering them are scams.
A binary option asks a simple question, such as whether bitcoin will be above 100,000 dollars in fifteen minutes. If the answer is yes at expiry, the buyer receives a fixed payout, often 70 to 90 percent of the stake on top of the stake itself; if not, the whole stake is lost. Unlike standard options, the size of the move does not matter, only which side of the line price ends on.
Short-dated crypto binaries are heavily marketed to retail users through social media ads, affiliate programmes and apps that resemble games. Regulated, exchange-traded binary contracts exist in the US, and on-chain prediction markets work on a similar yes-or-no logic, but much of the activity happens on unlicensed offshore brokers.
Regulators in the EU banned the sale of binary options to retail clients in 2018, and the UK, Israel and others followed. Because payouts are below even odds, the expected return is negative, and many platforms have been exposed for manipulating prices, refusing withdrawals or simply disappearing with deposits.
Example
An app promises an 85 percent payout if ether is higher in five minutes; a user stakes 100 dollars, ether ticks down by a cent at expiry, and the full 100 dollars is gone.