[Maarten88]

Ok, so these bitcoin futures let people bet on the future bitcoin price without actually owning any bitcoins, without having any actual stake in the actual market. (these futures are settled in cash, so nobody ever has to deliver any actual bitcoins)

That seems to be an ultimate insult and revenge of the finance industry toward the original idea behind bitcoin.

I am again amazed how the finance industry gets to have their own tax-free casinos (where they play the game of I win / You loose with other peoples money) while ordinary gambling addicts have all kinds of rules to play by and taxes to pay when they need a fix for their habit.

That said, I also fail to see why any sane person would want to play this specific bitcoin futures casino. Even at current market cap, the bitcoin price seems to be easily manipulated by a few "bitcoin whales", so it would seem the odds are stacked heavily against these new wannabee bitcoin investors. It seems like a new way to make even more money for big bitcoin traders.

I'm grabbing popcorn.

[zodiac]

> That seems to be an ultimate insult and revenge of the finance industry toward the original idea behind bitcoin.

I don't think you need to pass any sort moral judgement about the existence of this. Cash-settled futures exist for almost all traded commodities (oil, gold, pork bellies at one point...)

[Maarten88]

Not my moral judgement, I think the creator of bitcoin was quite explicit in his (or her) disapproval of the finance industry and governments inflating the economy by injecting large amounts of money, and went on to create a currency with a fixed supply. It is ironic these futures are effectively leveraged bitcoins, needing central trust. I'm pretty sure Satoshi would not approve.

That said, I do question the value of cash settled pork belly futures when you are not going to buy or sell any actual pork belly in the future. If I were to write tax law, I'd tax it the equivalent of casino tax, at least.

[baddox]

It’s one thing to say that Satoshi would not approve. That’s likely true. It’s another thing altogether to say that Satoshi would be surprised by this, or that it is in any way ironic.

[EpicEng]

Well Satoshi also created a currency which is completely usuited for the task due to it's limited supply as well as a host of external issues. So... meh?

[JumpCrisscross]

Finance is pragmatic. Lots of dumb money is chasing Bitcoin. Philosophical leanings of early backers, who relinquished control by nature of the network’s design, are irrelevant.

[closeparen]

I thought the original idea of Bitcoin was to be a currency and make fiat money obsolete. The finance industry is simply acknowledging that it’s a speculative asset and mostly interesting for its volatility, something that fits well within its longstanding frameworks.

[kjrose]

This is my thinking. The volatility of bitcoin is insane and fascinating. It’ll be a real experiment if futures flattens it out.

[lallysingh]

Why isn't it a currency future: https://www.investopedia.com/terms/c/currencyfuture.asp ?

[malloryerik]

It's for hedging exposure to reduce uncertainty. Futures markets historically reduce volatility and allow hedgers to plan ahead in their businesses. Speculators are there to provide liquidity and aid in price discovery. Yes, lots of caveats, but generally it seems to work. While initial bouts of increased volatility have sometimes come just before ("pre-hedging") and after the introduction of futures, their effect after an initial period has been to markedly reduce volatility. I can't see how BTC could survive without futures, tbh, though I'm actually a pessimist who thinks the blockchain will find other uses.

OK, think of bitcoin as a means of exchange. Thing is, it's so volatile and potentially slow that who knows what value you're going to actually get on the other side of a transaction. You transfer one BTC but by the time it arrives at the other side it could be worth $2,000 less, so you're in the hole $2,000? Good grief. Likewise if you accept payment in BTC, you must wait for it to arrive. In an active, healthy futures market, you can dip in and out with extreme speed and ease

Futures allow me to hedge transaction, mining and other uncertain time (assuming the futures contracts are actually popular) by hedging. However, because the few people who actually use BTC for something other than speculation probably don't typically send and receive whole bitcoins, or in the CME futures case, five BTC at a time, the futures markets might in fact be useful for... intermediaries?

Anyway, BTC is even too wild a ride for futures! Clearing houses (who accept responsibility if losing traders go broke and can't pay what they owe) aren't all so eager to jump in, because, you know, danger. Also, futures markets have price limits that act like circuit breakers to calm things down when the trading gets too insane -- "limit up" and "limit down" -- when trading is halted, and you can neither buy nor sell. This is a dangerous time, and if you've traded on these markets you'll know that you can feel like you're going to have a heart attack when the market is flying dramatically, suddenly trading stops, and you have no idea at what price it will reopen. But BTC has been reaching this kind of limit range with increasing frequency.

The various exchanges are constantly trying out new products, and most of them never catch on. So, who knows about BTC.

Anyway, if you don't think that Bitcoin should be connected to the rest of the world, including the financial world, then why use them?

[Laforet]

The CME future trade halts at 20% deviation from reference rate, I am curious what effect it will have on spot prices.

[EGreg]

I said long ago that banks can issue derivatives on top of bitcoin. And we are right back to where we began.