A new wolf has entered Wall Street. Bitcoin hit the spotlights yet again, after its debut on December 10, 2017 on the CBOE (Chicago Board Options Exchange). One week later, the CME Group, the world's largest derivative exchange operator
, also started to offer Bitcoin futures. Futures are financial contracts
obligating the buyer to purchase an asset or the seller to sell an asset, such as a physical commodity or a financial instrument like currency or company stocks, at a predetermined future date and price. At its core, futures let investors speculate on exchange rates. If you think value will decrease, you go short
. When thinking of a value increase, that means you go for long
. For example: you are buying on 16,000 and you go short, meaning you expect the exchange rate will decrease. If the rate increases to 20,000, however, you effectively lose 4,000. If the rate does decrease, and reaches 12,000 for example, you gain 4,000.
This could be a significant step in the lifespan of the digital currency
, as futures allow every mainstream investor to bet on the rise or fall of the cryptocurrency without owning Bitcoins themselves. As of December 2017, however, the CBOE and CME futures seem but a drop in a wider crypto ocean. CoinMarketCap lists 168 online trading markets in digital currency, five of which are used in the price calculation of the mentioned futures: GDAX, Bitstamp, Kraken, iBit (CME) and Gemini (CBOE).