Crypto futures can be described as a peer-to-peer contract between a pair of investors betting on the price of a cryptocurrency. Similarly to both stocks or commodities, futures in the crypto space allow investors to bet on the price trajectory of a cryptocurrency or pool of cryptocurrencies. The contract of the underlying asset is a derivative of said asset.
This can be a contract to either buy or sell the asset for an agreed upon price at any later date, hence the reason it is known as crypto futures. Once that date is reached, the contract is executed. Crypto futures are executed on cryptocurrency exchanges.
Some brokerages are approved for crypto futures trading, and a good deal of crypto futures are regulated. These features have been successful in bridging traditional investors into the crypto world while maintaining a sense of familiarity and security, seemingly being a less risky and far simpler process than actually buying cryptocurrency.
Not all crypto futures are regulated however. Unregulated futures present more opportunity for excessive risk-taking, such as leverage amounts up to 200 times the trading amount. However, both share the same general requirements in the contract. The necessary components of these contracts are as follows:
A specific number of units that are to be bought or sold
Pricing selection.
Contract margin requirements.
Designated trading hours.
The product or asset coding.
A mutually agreed-upon settlement method.
As of right now, the top 3 crypto futures exchanges are #1 Binance, #2 ByBit, and #3 FTX.