How Futures Work And Why Bitcoin Futures Were Just Approved

Futures are financial contracts that form a binding agreement between two parties. They are similar to options in that the holder can buy or sell a commodity at a predetermined price and time. The difference between the two is that futures are cash settled whereas options are stock settled.

Bitcoin futures were approved by the Commodity Futures Trading Commission (CFTC) on December 11, 2018. The approval comes after years of debate over whether it is possible to create legally binding contracts based on digital currencies.

Bitcoin futures are here The launch of Bitcoin futures could be seen as a game-changer for the cryptocurrency market, paving the way for large-scale institutional investors to enter the market. In addition to being able to hedge against price volatility, these funds may also benefit from arbitrage opportunities that arise when prices differ across exchanges due to pricing differences and regulatory differences.