Initial thoughts on Bitcoin futures

Good evening to my esteemed readers,

As the day comes to a close on Sunday the 10th December 2017 in Australia those residing on the opposite side of the globe will be waking to the first Bitcoin futures available to large traders.

I figured I would touch on my initial thoughts in dot point format for brevity. I would like to preface this by saying I don't have a solid foundation in any economics and what I express below is not to be used as any sort of trading advice or have any particular value to it beyond seeing other's thoughts. I take no responsibility for any decisions you make.

So without further ado:

• This is a form of off chain scaling. Any contracts, trades and the like are not written to the chain, previously moving value from one exchange to another via the cryptocurrency route would require use transactions (Tx) in the blockchain. This means less movement of coins just for those trading hence more space for the users.

• They cannot take possession of the asset which means that they don't develop an appreciation of what it could do in the future or get a feeling of how to use it. This means lower risk for them if something went totally wrong but it also takes out the "flaws" in the ecosystem when someone gets hacked or sends trades to the wrong address. It also implies that we will find less people exchanging coins on exchanges which are currently the honey pot waiting to be attacked. This could lead to improved price stability as less coin are solen.

• We open the doors for corporate money to flow in and improve the bank friendliness as a stock traded on a national exchange can't simply be outlawed. For example you would not see cocaine on one of these exchanges. This may help Bitcoin be viewed more as a gold asset which gives us more time to develop lightening network and other scaling options.

• A great potential for a rise in the market cap. As the money gets bet for and against Bitcoin it will likely move the asset price. If everyone were to short and that brings down the price the actual bitcoin being used for exchanges, purchases and mining would maintain a value a future could not influence while a price rise would promote the value being seen as a way to grow dollars as many are using it for in the cryptocurrency community. For example it costs a few thousand US dollars to mine a bitcoin, a miner will hold it if it drops below this value in order to wait for a return in value hence reducing circulation supply and maintaining a benchmark price.

• These futures are not actually attached to the physical asset beyond a paper contract, we may not see anything different happen at all except a lot of hype.

I am also linking to Andreas Antonopoulos recent speech below as some may find this useful.

Regards,
TheFundiAU

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As always... Comments welcome I will try to respond when I have time. You should make your own decisions or contact professionals. I am not liable for any conclusions or decisions made from viewing this post or links.

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