The 5 Minute Guide to Bitcoin Futures.
Confused about Bitcoin Futures? You are not alone.
That’s why I have put together a 5 minute guide that will tell you everything you need to know to understand Bitcoin futures.
What are futures?
Normally, when you buy something, the transaction is “settled” immediately. I give you 5 dollars, you give me a three eggplants and we are done. A futures contract is a little different — instead of settling now, we agree to settle at a specific time in the future, for a specific amount.
A futures contract has two parts — the price, and the date of delivery.
So if I agree to give you 5 dollars on Monday for 3 heirloom tomatoes — that’s a futures contract. There are a few more details you will need to know— but that is the essence.
Who uses futures?
There are two main groups of futures buyers.
1: The producers and consumers of the underlying commodity who want to hedge.
For example, If you grow tobacco, you might sell tobacco futures so you can lock in your price, in case the price of tobacco drops by the time you bring your tobacco to market. In the case of bitcoin, the miners fall into this category.
