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RE: Is This Why Charlie Lee Sold His Litecoin?
Okay so derivatives and futures are the same or derivatives include futures but not only?
Okay so derivatives and futures are the same or derivatives include futures but not only?
If the FUTURES "settels" with the underlying commodity its NOT a derivative.
for instance if you mine gold and you want to LOCK in your sales price, you sell a FUTURES contract for the date you want to sell it,,, when the Futures Contrace expires you DELIVER the GOLD
But a Bitcoin Future is a DERIVATIVE because when you settle the contract you dont pay Bitcoin,, it settles in US Dollars. --- so the Contract price is "DERIVED" from Bitcoin - hence its a Derivative.
In the past Futures were almost never derivatives, they were a way for compoanies to FIX their costs so they could do good accounting.
DERIVATIVE markets don't need an underlying commodity,,,, for example the GOLD derivatives markets have a value of some 10-100 times the amount of GOLD that exists in the world,,,, its just "Paper Gold" or better said,,, just a bunch of people "BETTING" on what the price of GOLD with be.
DERIVATIVES - means Las Vegas on Wall St.
FUTURES - means FIXING your COSTS or PURCHASE PRICE
Wow, thanks a lot for the detailed information, I really feel more confident about it!
Derivative markets can be:
Futures
Options - (options are used as INSURANCE POLICIES or "hedges" on one's bets)
INDEX funds (that derive their value from the underlying stocks)
etc.