Let me tell you, I just learned about this term a few days ago, and I want to share my newly acquiered knowledge with you !
What is a FUTURE ?
First, the definition : A futures contract is a legal agreement, generally made on the trading floor of a futures exchange, to buy or sell a particular commodity or financial instrument at a predetermined price at a specified time in the future. Futures contracts are standardized to facilitate trading on a futures exchange and, depending on the underlying asset being traded, detail the quality and quantity of the commodity.
What does it have to do with BITCOIN ?
Simple : Last Monday, the first ever bitcoin futures were launched in Chicago ! What will be the short and long term consequences ?
The launch of the contract on a regulated exchange is regarded as a sign that bitcoin is becoming more mainstream rather than a currency associated with technology experts and even criminals.
As Daniele Bianchi, assistant professor of finance at Warwick Business School said : "The launch of bitcoin futures has the potential to add further momentum and thus increase the appeal of the cryptocurrency to both institutional and retail investors.". That may mean a more stable price and less volatility. And consequently to an increased demand,prices could skyrocket ! That might seem like a good thing, but this tool is by definition a tool of speculation, so with it comes of course all the risks of speculation.
At the end of the day, only time will tell us the real consequences of this new finance tool !
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