Intercontinental Exchange (ICE.NYSE), the owner of the New York Stock Exchange, launched its bitcoin futures contracts on Sunday, hoping to snare the attention of investors who have been previously hesitant about dealing with cryptocurrency.
This deal has been a long time coming. It had been little more than rumour for months, and took on a lot more credence as bitcoin started to charge, and now that it’s finally here, the internet (and specifically, crypto-twitter) have been generally receptive about it, even as some circle the wagons and drop their pants:
As the Bakkt @Bakkt launch flops, #BTC #Bitcoin‘s limitations have been found out and institutions are not interested. Time for a new leader to emerge with real utility, liquidity and adoption.#Crypto #XRPCommunity #XRP #ADA #ETH #VET #XTZ #NEM https://t.co/AJ0qY9oIfs
— Wise Cryptos (@wisecryptos) September 23, 2019
But wait. What the hell’s a future and what’s this got to do with me?
Here’s what Investopedia has to say:
Futures are financial contracts obligating the buyer to purchase an asset or the seller to sell an asset and have a predetermined future date and price. A futures contract allows an investor to speculate on the direction of a security, commodity, or a financial instrument.
When you boil it down, the conflict in cryptocurrency is about trust. How many do you trust your government? How much do you trust your fellow man to act fairly in any deal? Satoshi had none, and he invented a completely decentralized system that eliminated the necessity of faith, trust and the closing handshake.
He also spread it far and wide through a network of interlocked and linked users, perpetuated democratically only through consensus. He believed that incorruptibility came only with anonymity, and thus, the decentralized system was born. At an infrastructure level—with the accompanying blockchain technology—that made sense. An immutable ledger is a great place to store data for posterity, because it cannot be altered without consensus.
If there’s anything that hard-right libertarian edgelords and democratic socialists have in common it’s that they distrust governments made of rich people out for their own interests. For these folks, Bitcoin is a hedge: a safe haven to put their assets, where they can’t be snatched away by either the rich (for the left) or the government (for the libertarians).
They envision a world where finance and politics are forever separated by a democratically-controlled system of decentralized coins. No more federal banks controlling the monetary supply, and a fair distribution based on merit rather than birthright.
Ironically enough, it’s the unintentional collusion of these two groups to keep institutional investors out that ensures that cryptocurrency doesn’t see the widespread adoption that would probably make them all rich.
If the exchange works, it will give institutional investors a chance to trade Bitcoin in a secure, well-monitored space, which will help with volatility, help with visibility and build trust, which are the three of the biggest roadblocks towards widespread adoption and legitimacy.
Contract Details
Listed on ICE Futures U.S. and cleared by ICE Clear US
Settlement price does not rely on any unregulated spot crypto markets
Margined daily and monthly contracts with ability to go to physical delivery
Delivers to the Bakkt Warehouse, which is operated a limited purpose trust company regulated by the NYDFS, that will serve as a qualified custodian
Available on ISVs and WebICE
This isn’t the first time bitcoin futures have been considered. Cboe Global Markets launched its own contracts in late 2017 has stopped adding new ones. LedgerX met with a regulatory barrier when they tried to launched settled bitcoin figures. They also differ from competitor, CME Group, in that CME’s futures contracts pay out in fiat while Bakkt’s pay out in cryptocurrency.
And what’s happened to Bitcoin in the few days since the future’s trading went live?
The first futures trade went through on ICE’s futures exchange at 8:02 p.m. For $10,115.
The number of contracts in the first hour stood at just 5 total. Within 24 hours they were up to 71 futures contracts, and they’re up to 165 contracts as of this writing.
This tweet says it all, doesn’t it?
Getting bareBakkt at the moment! #Bakkt #btc @Bakkt pic.twitter.com/gO0OQrvuWr
— R4nz0 (@r4nz0) September 24, 2019
Could be nothing. Could be everything. Too early to tell.
Keep hodling.
—Joseph Morton