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It's very wrong. Futures contracts on traditional exchanges have no counterparty risk and require the deposit of a significant amount of upfront capital as coll
by johnnienaked 10mo ago
It's very wrong. Futures contracts on traditional exchanges have no counterparty risk and require the deposit of a significant amount of upfront capital as collateral. If the spot price of the underlying moves in either direction, debits or credits are made to and from each margin account and if you don't have the money to cover a margin call, the contract gets closed.
- tommek4077 10mo agoFuture markets give traders leverage of 100x sometimes or more. Margin requirements are much lower than trading spot.
- johnnienaked 10mo agoMargin requirements for trading spot are zero, though initial capital requirements are obviously, well, whatever spot is. Futures contracts aren't just pieces of paper traded between people, they are actual promises to pay for physical delivery of the underlying. It's not surprising to me that crypto people consider them nothing more than leveraged gambling slips but that's really not how one should think about them. Personally I think crypto needs far heavier regulation than it gets.
- tommek4077 10mo agoEver heard of liquidations?