What are Cryptocurrency Derivatives and Are they the Future?

The biggest catch phrase within the crypto industry throughout 2019 was undoubtedly “cryptocurrency derivatives”.

We are exploring exactly what crypto derivatives are, including the three main types of cryptocurrency derivatives, followed by then taking a look at the best places online to trade these new financial assets in 2020.

What are Cryptocurrency Derivatives?

Cryptocurrency derivatives are essentially just an agreement between two parties for a trade of a designated amount of a certain cryptocurrency, to take place at a specified price and on a specified date.

Cryptocurrency derivatives can be split into three predominant groups: cryptocurrency futures, cryptocurrency options, and cryptocurrency perpetual swaps.

Cryptocurrency futures are straightforward crypto derivatives, meaning that they are simply agreements for a trade to take place in the future which are compulsory.

Cryptocurrency options are very similar to crypto futures except for the fact of crypto options, as the name suggests, are optionally able to be completed. Unlike crypto currency futures the trader can select whether or not they will complete the trade on the designated date.

Crypto currency perpetual swaps are the same as crypto futures, except that they are completed in USD instead of being completed in Bitcoin.

Best Places to Trade Cryptocurrency Derivatives Online

PrimeXBT

PrimeXBT is one of the world’s leading trading platforms and over the past few years and has built its reputation for providing an intuitive trading interface, a wide range of assets in instruments, and the lowest fees in the industry.

PrimeXBT’s platform is simple to use, and provides a wide range of professional charting and trading tools such as multi-monitor support, and fully customisable widgets for different trading strategies.

PrimeXBT lists a wide range of crypto assets such as BTC, ETH, LTC, XRP and EOS, as well as as a wide range of traditional asset such as stock indices, forex pairs, commodities, and metals, with leverage of up to 100X on cryptoassets and leverage of up to 500X on all traditional assets.

PrimeXBT’s fee schedule is lower than any other major trading platform with a flat rate of 0.05% applied to all trades irrespective of the size of the trade of the asset being tried to.

KuCoin

KuCoin is one of the newer derivative specific platforms to be launched, and so far has gained some traction in the markets.

The platform has a user-friendly interface, as well as listing a good range of cryptocurrency derivatives for traders to choose from.

The platform has not seen the same kind of penetration into the market that other platforms such as PrimeXBT have seen, however being that they have maintained a focus on the niche of derivatives there is a potential for KuCOin to grow in the coming years.

In Summary

Cryptocurrency derivatives are easily one of the fastest growing sectors within the crypto market, fuelled largely by their versatility and the relinquishment of the need for legal ownership of cryptocurrency.

Time will tell whether or not these fledgling trading instruments will become a core part of the crypto industry, but what is for certain is that there is a significant demand for the new instruments amongst crypto traders.