A futures contract in which the underlying is a cryptocurrency such as Bitcoin and Ethereum. A cryptocurrency futures contract is an agreement to buy or sell a cryptocurrency (or broadly a crypto asset) at a specific time in the future.

Bitcoin (abbreviation: BTC ) is (as a coin) is the currency a decentralized peer-to-peer cryptocurrency that is supported by its users with no central authority or middlemen. Ethereum is a decentralized blockchain with smart contract functionality. Bitcoin, the first of its kind cryptocurrency is maintained by a proof of work (PoW) blockchain. Ether (abbreviation: ETH) is the native cryptocurrency of the platform. Cryptocurrencies are digital assets. Unlike fiat currencies, cryptocurrencies are powered by peer-to-peer networks rather than issued and backed by central banks.

Futures are a derivatives (cryptocurrency derivatives) which traders and investors can deal in on crypto exchanges. Cryptocurrency futures contracts are established between two market participants who take direction or bet on a cryptocurrency’s future price, granting them exposure to cryptocurrencies either with direct holdings or without purchasing them. Cryptocurrency futures are standard futures contracts, i.e., they have certain features defined by exchanges and portals where they trade.

By nature, a futures contract is an agreement to buy or sell an asset at a predetermined price at a specific future date. Both speculators and traders use futures contracts to produce returns and mitigate risks (hedging, risk management, etc.)

Traditionally, a futures contract is physically settled, where one party must deliver the underlying asset, while the other takes delivery. As digital assets, cryptocurrencies are settled monetarily. However, with the use of perpetual futures contracts, an expiration date is not a requirement for settlement.

A cryptocurrency futures exchange is a platform set up specifically for market participants who seek to engage in the buying and selling of cryptocurrency futures contracts according to preset features and contractual formalities. A cryptocurrency futures is mainly designed for market participants who wish to mitigate the risk of future price changes in a crypto asset.