In one sentence: It's like making a bet with someone today, "In three months, Bitcoin must be $10,000 each," and when the time comes, whether to fight or how to fight, it's all written down on paper—whoever runs away is a coward.

Difference between the two brothers, understand in one second:

Forward Contracts

  • Negotiated privately, life-and-death in WeChat is fine
  • Quantity, date, price all arbitrary, you can even sign for 0.618 BTC
  • No one supervises, based on trust, if you default, go to court and tear each other apart
  • Big institutions love it, basically played in OTC dark rooms

Futures Contracts

  • Open casino run by the exchange, all rules unified
  • Contract size, expiration date, settlement time every day, all fixed
  • Clearing house as bodyguard, dare to default? Directly zero out your account
  • Forced daily profit/loss calculation (mark-to-market), if losses exceed, immediately add margin, or get liquidated
  • Leverage as high as you want, retail traders' carnival

One sentence summary of the difference:

Forward contract is "You fight me one-on-one, if you lose and don't pay, you run away,"

 

Futures contract is "Everyone enters the casino, the house also acts as the referee, you can't run."

What are futures really for? Five flying knives straight through you

  • Hedging: Miner bosses fear Bitcoin drop, sell next year's mined coins in advance, lock the price, sleep easy
  • Leverage: 1000U principal at 125x, coin price moves 0.8% you get liquidated, 1% and you're starting at a million
  • Shorting: No coins in hand, sell first, bet on drop and get rich
  • Price discovery: Tonight's BTC perpetual contract price basically equals everyone's mind price tomorrow morning
  • All-in paradise: Retail's favorite "zero or rich" two-choice game

What to do when it expires? Three paths

  • Close position (99.99% do this): Reverse a trade and leave, profits/losses settled on spot
  • Roll over: This month's contract ending, close and open next month's, continue betting big
  • Actual delivery: At expiration, really deliver a ship of crude oil or transfer 1000 BTC (retail don't dream, almost no one chooses)

Contango & Backwardation markets, understand in one pic

Market TypeCore LogicUnderlying Reason
ContangoFutures more expensive than spotHigh cost to hold coins, everyone lazy to hold spot
BackwardationFutures cheaper than spotSpot is in crazy demand, futures on discount

Crypto futures ultimate mod = Perpetual contracts

  • No expiration, hold as long as you want
  • Funding rate every 8 hours to prevent price drifting too far
  • Leverage up to 125x (official death mode)

Final crypto blood and tears summary

Traditional futures, no matter how you play, at most lose margin, can still default and run.

 

Crypto futures directly put you on the electric chair:

 

One red candle to zero, one green to millions, only 0.01 seconds to regret in between.

 

Want to play? Sure.

 

First tattoo "stop loss" on the back of your hand,

 

Then decide whether to pull leverage above 10x.

 

Those who survive can eat meat in the end;

 

The dead are forever just leeks on the dealer's knife.

 
Choose, brother.