What is Bitcoin Futures? Definition, Explanation, Guide.

Everyone is asking the question that what are bitcoin futures, should I invest in bitcoin futures? how do bitcoin futures work? what does it mean for the bitcoin price? How does it affect the blockchain technology and cryptocurrencies? and where can you trade bitcoin futures. I will go into answering all of these questions but before I go into that, let’s start from the beginning.

Before understanding Bitcoin Futures it is imperative to understand what are Futures and what do they mean in finance. Understanding ‘Futures’ is understanding half of the ‘Bitcoin Futures’.

What are Futures?

Futures are contracts that puts buyer and seller under the obligation that buyer will buy and seller will sell the committed asset, commodity or financial instrument at a date and price that was decided in advance regardless of what is the actual price.

Futures contracts are negotiated and traded on futures exchanges.

Does dealing in Futures mean making lot of money?

If you have a critical piece of information then you maybe able to use it to your advantage of earning exponential profit but Futures are not always necessarily used for gaining profit; instead, it is used in order to minimize risk and protect individuals and institutions from loss caused by change in prices.

How does a futures contract work

There are two types of positions you can take in futures, Short and Long. Short means to sell and Long means to buy.

If you opt to get into long then you’d need to buy the chosen asset at a specific price upon contract expiry.

If you opt to get into short then you’d need to sell the chosen asset at a set price upon contract expiry.

An easy example is about a real estate developer who uses lot of cement for its projects. Suppose the current price of cement per Kg is $1. If the speculation is that cement prices will increase for next 5 months before getting stable then in this case the real estate developer can buy 5 months futures contract of 10000 kg cement at current price. This contract is worth $10,000.
When the contract expires after 5 months and cement per Kg is $1.5 then the real estate developer have saved $5000.

This contract protected both the seller and the buyer. Cement vendor is protected even if the prices fall because he will still be selling at previous higher price and if the price goes up the real estate developer will still be paying the previous price.

What are Bitcoin Futures?

As you have learned so far that futures can be used for physical commodity as well as financial assets and now it can be done for electronic assets like bitcoins also.

In bitcoin futures, the contract is based around the price of bitcoin and speculators can speculate what the price will be in future.

bitcoin futures can be traded on some regulated exchanges even if the bitcoin is not regulated.

How does bitcoin futures work?

Bitcoin futures follow the same principles of traditional futures.

With bitcoin futures, investor can take two position: long or short.

Imagine you own a bitcoin that is currently worth $20,000 and you think price may go down soon so you sold the bitcoin futures contract at $20,000 Suppose the price goes below $16,000 and the bitcoin futures contract have the same price then you can buy back the contract and earn $4000.

Where to trade bitcoin futures?

BitMEX
OKCoin
CBOE
Chicago Mercantile Exchange (CME)

What is BridgeProtocol (bridgeprotocol.io)(IAM token)?

You must have heard about Bridge Protocol ICO. In this post I will try to explain what is BridgeProtocol and how it works and whether it fulfils any useful purpose.

First of all this is not about Bridge Protocol Data Unit or BPDU that is used in networking.

What is the mission of Bridge Protocol?
It is stated on the website that Bridge’s mission is to assist Initial Coin Offerings (ICOs) by creating avenues and methods for safe, legal and compliant ICOs.

Bridge wants to create an open, distributed network of validators that regulates the behaviour of participants for creating safe and high assurance environment.

Bridge will facilitate and create methods to implement business processes that comply with existing standards and regulations. Said system will maintain a private blockchain to process assets securely using smart contracts that no third party can influence based on the laws of regulatory body of nation for whom the solution is being built. This system will be composed of trusted virtual machines that will enable user accessible functions for enterprise grade business operations.

What’s the connection with ICO and ProjectICO?
As you have read and noticed, entrepreneurs from all over the World has been raising billions of dollars through ICO or tokens which outran conventional seed funding and venture capitalists funding. In some cases, like it happens with any other business, some people lied and committed fraud by not releasing the mentioned product and not keeping up with the promises, this caused losses to some people and bring in regulatory authorities to monitor it and regulate it.

Legal experts in this area charge $125,000 to $250,000 for corporate structuring and general advisory. Bridge believes this has created unnecessary cost barriers for genuine candidates who want to create useful product but have limited resources.

To follow Regulations like Know-your-customer (KYC) costs customers above $30,000 if done by traditional means whereas most people doing ICO now from their home save this highly confidential data in their personal PC and many doesn’t provide no protection whatsoever.

Until now, companies and individuals have been using traditional business models and systems in this space without tapping the blockchain potential has to reduce cost and protecting customers by utilizing it.

Bridge have consulting experience with ProjectICO that told them about the financial and legal obstacles genuine ICOs has to face.

What is Bridge Protocol?
The Bridge Protocol Corporation aims to create a microservices architecture for business applications that will run on the blockchain.

The Corporation will own and run a certificate authority on Blockchain. Protocol will provide services such as identification.

Bridge Protocol have chosen NEO blockchain due to its existing model and potential. It will help Bridge in creating a Public Key Infrastructure (PKI) for its userbase.

The Bridge Identity Management System (bIMS) will issue certificates that adhere to regulations, standard, model while providing extensions (application policies, key usage, etc.) so the application logic can be developed and utilized on Bridge’s Blockchain.

These certificates will be issued to real persons, machines and “virtual persons.”

The Bridge Protocol uses Bring-Your-Own-Key (BYOK) interface to verify user ownership of keys, data, and processes.

Due to Bridge’s focus on commercial off-the-shelf (COTS) hardware encryption
modules help mitigating costs and eases the process for any player big or small to realize the potential of their idea.

What is the distribution mechanism of Bridge Protocol?
Token used by Bridge is called IAM. It uses NEP-5 created from NEO smart contract.

Only 1 billion tokens will be created. First portion of 500 million will be distributed through crowdfunding while remaining 500 million will be managed by Bridge Corporation to support development and maintenance.

Is Bridge Protocol a promising project?
I think it is a project with huge potential especially by looking at the state and potential of blockchain industry it will not be difficult to see many newcomers with great ideas trying to tap using ICO. A system like Bridge which eases the whole life cycle of ICO is indeed a very promising idea.

Is Bridge Protocol a good idea to invest in?
Do your own due-diligence. I would say, if Bridge does what it says it will do then I think it is definitely worth investing in.