Futures, an English stock market term that entered the crypto world at the end of 2017 as bitcoin futures. Futures are tradable period contracts. A buyer and a seller make an agreement to trade for a certain and fixed price in the future. It obliges the buyer to purchase a certain quantity of goods from the seller at a fixed price and at a certain point in the future.
Example: Person 1 bought 420 bitcoins in 2017 for a small 1.9 million euros (1 bitcoin = € 4,500). On May 22, 2020 person 2 is determined to buy 420 bitcoins from person 1, for 2.5 million euro (1 bitcoin = € 5,952.38). This agreement is included in a contract, a future. Has the price of bitcoin crashed on that day? E.g. under € 4,000, – then person 1 makes a huge profit and person 2 has a duration sale. Is bitcoin ‘to the moon‘ then person 2 has a good deal and person 1 sold ‘too early’.
However, in the case of bitcoin futures or crypto futures it works a bit differently. The crypto’s are not exchanged. With crypto futures it is possible for investors to speculate on the future price of bitcoin and Ethereum, regardless of whether it will drop or rise. It is simply gambling on the stock rate price on an agreed day.