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RE: Is This Why Charlie Lee Sold His Litecoin?

in #bitcoin7 years ago

If the FUTURES "settels" with the underlying commodity its NOT a derivative.
for instance if you mine gold and you want to LOCK in your sales price, you sell a FUTURES contract for the date you want to sell it,,, when the Futures Contrace expires you DELIVER the GOLD

But a Bitcoin Future is a DERIVATIVE because when you settle the contract you dont pay Bitcoin,, it settles in US Dollars. --- so the Contract price is "DERIVED" from Bitcoin - hence its a Derivative.

In the past Futures were almost never derivatives, they were a way for compoanies to FIX their costs so they could do good accounting.

DERIVATIVE markets don't need an underlying commodity,,,, for example the GOLD derivatives markets have a value of some 10-100 times the amount of GOLD that exists in the world,,,, its just "Paper Gold" or better said,,, just a bunch of people "BETTING" on what the price of GOLD with be.

DERIVATIVES - means Las Vegas on Wall St.
FUTURES - means FIXING your COSTS or PURCHASE PRICE

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Wow, thanks a lot for the detailed information, I really feel more confident about it!

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