Bitcoin Is Now A Futures Product Like Coffee And Chocolate
Bitcoin has finally found its proper listing place: The futures market. Most investors and consumers will never touch a futures contract or a derivative. A derivative is a financial instrument and the most common form of a derivative is a futures contract. They get very complex at times, but for the most part many are just board listed futures contracts like pork bellies and bushels of corn and bars of aluminum (see more on futures and how they work at Investopedia). In response to this — and heavy lobbying efforts and financial sponsorship — CME has launched a product called the BRR — Bitcoin Reference Rate. This doesn’t make it more readily available or mainstream, but it does solidify the fact that it exists and there is financial interest surrounding it. Bitcoin is no longer a fleeting and useless fad. For the CME — Chicago Mercantile Exchange to list a bitcoin product the investing public has the necessary volume and interest to trade.
CME CF Bitcoin Reference Rate (BRR) and CME CF Bitcoin Real Time Index (BRTI) — both are “a standardized reference rate and spot price index with independent oversight are accelerating the professionalization of bitcoin trading and further establishing digital assets as a new asset class” — BRR and BRTI launched November 14, 2016 globally, and the products will launch on the CME by the end of the year. — See the CME BITCOIN site here.
Dupont (from the American family) said it best in 1768: there must be a necessary relation between the value of foodstuffs [sic] in the price of a working day, which must secure to the worker the means necessary to satisfy his needs. Oddly enough this is happening in bitcoin. You can see common themes in the charts below. While the “mining” costs rise — essentially computer power and electricity, the hash rates are spiking, miner revenue is spiking. Those mining see this as a simple way to coordinate production and profits and speculators are rushing in. Jamie Dimon of JP Morgan may have been mistaken when he said only criminals and drug dealers use the currency. There is natural curiosity in money and wealth and the internet has given the entire world the ability to be a free merchant, speculator and gambler.