Bitcoin is too big to ignore, so exchanges are coming up with new ways to trade it

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Anticipation for the Bitcoin futures market has driven the price of bring bitcoin to the trading pit cryptocurrency to record highs. Runners were strictly prohibited from actually running, and byelectronic trading had already outmoded the majority of my job. In the last 15 years, the pits have gone from a chaotic din to a deafeningly silent ghost town. Only a waning handful of brokers still do open outcry orders, and the shouting tradition seems gratuitous. But what are futures anyway? And how does this change the crypto game?

I am a third-generation worker in the bizarrely specific Chicago futures industry. My grandfather, uncle, mom and dad all made careers buying and selling corn futures, or working for companies that did.

In fact, my dad screamed so hard and so often into the drowning din of the options exchange that he had to get voice lessons to both edge out the competition and soothe forming polyps. At the time, the Chicago Tribune found this reverse My Fair Lady moment an amusing anecdote for a personal interest story. If you can picture the finale of Trading Places, in which Dan Aykroyd and Eddie Murphy buy and sell orange juice futures, surrounded by screaming men in colorful jackets, you basically get it.

Typically, futures traders buy and sell natural resources found in our great country. Their names are as Midwestern as the Chicago locations of their exchanges—things like corn, corn oil, copper, soybeans, wheat, and pork bellies. According to the two exchanges, who have now lent their legitimacy to the once-strange global currency, Bitcoin futures will serve an important function in traditional exchange markets.

They could make digital assets more useful by allowing users and brokers to hedge foreign-exchange risks. Futures markets also have the ability to dampen the volatility of a product by removing some risk involved with trading raw assets.

By doing this, old-school merchants will be encouraged to get into the crypto game. Personally, watching these two ancient exchanges in a battle for Bitcoin bring bitcoin to the trading pit is both exciting and a little funny. The CME plans to offer a trading vehicle to trade the assets and promises safeguards to protect clients from taking big risks.

Another vote of confidence in Bitcoin futures: Startups like Athena Bitcoina Chicago-based crypto ATM company, and Bitnomiala derivatives exchange founded by area traders, have taken root around the prospect of these futures.

The CME may require traders to post extra collateral to trade Bitcoin futures, which could restrain bring bitcoin to the trading pit and selling. There are other naysayers with more skin in the game than your uncle who thinks Bitcoin is a ponzi scheme.

Months ago, before the exchanges considered introducing Bitcoin to the futures market, I spoke with my family about how crypto would revolutionize investing as a whole. They responded that passionate whispers about Bitcoin futures by brokers were scoffed at with serious reminders of tulip maniathe most famous commodity crash bring bitcoin to the trading pit convenient morality parable in history.

Until bring bitcoin to the trading pit, that 17th century disaster centered around the momentary trendiness of tulips in the Netherlands and the subsequent tragic and avoidable financial collapse. Claire Downs is a tech reporter who covers the intersection of the internet and pop culture. A third-generation worker in the Chicago futures industry, she specializes in cryptocurrencies and altcoins.

Bitcoin is the future of the futures market. Latest Chrome update may have broken millions of web-based games Phillip Tracy — May 7. Bitcoin is the future of the futures market Claire Downs —.

Graph via Bloomberg But what are futures anyway? Claire Downs Claire Downs is a tech reporter who covers the intersection of the internet and pop culture.

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I attended BitcoinExpo in London this weekend. There were some very interesting talks and I met some great people. In the bar of 93 Feet East on Brick Lane, Paul Gordon, a former trader, assembled a group of fifteen or so wannabe Bitcoin traders from amongst the attendees at the conference and created something rather special. He explained the rules of the pit, taught everybody the hand gestures, ran a couple of trial runs and then trading began for real.

What I found so fascinating was that all the elements were there:. But what most interested me was what happened once the trading was over: You can think of it as being everything that needs to happen after a trade is agreed to get it to the point where assets can change hands. Of course, clearing for a market such as the London Stock Exchange or in New York is somewhat more complicated than this.

But the essential character is the same. In short, the core principles of clearing emerged spontaneously on a Saturday afternoon in a bar on Brick Lane. You are commenting using your WordPress. You are commenting using your Twitter account. You are commenting using your Facebook account.

Notify me of new comments via email. Standard Posted by gendal. Posted on December 1, Posted under Banking , Bitcoin , Clearing. What I found so fascinating was that all the elements were there: Hi Sam, Good points — after all, all markets need speculators to function smoothly. Leave a Reply Cancel reply Enter your comment here Fill in your details below or click an icon to log in: Email required Address never made public.

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