The city cannot shelter the body.
The hometown cannot shelter the soul.
Hello, I am Bicong (Bitcoin Beginner), Zhan Qiangwei.
A nonprofessional programmer writing daily, bringing you crypto stories every evening at 21:50.
Futures usually means standardized contracts created by an exchange for delivery of a specified amount of an underlying asset at a future time and place. The asset can be a commodity, financial instrument, or financial indicator.
Futures developed from spot forward transactions: initially both parties orally promised to exchange a quantity of goods at a specified time. As trading expanded, written purchase contracts gradually replaced oral promises.
In 1570, London opened the Royal Exchange, the world's first exchange for commodity forward contracts.
In 1985, the Chicago grain exchange introduced standardized “futures contracts” to replace forward contracts.
Initially futures were confined to traditional finance, with prominent venues including the Chicago Board of Trade, New York Mercantile Exchange, and New York Commodity Exchange. They matured over many years and also appeared in digital currency markets. Famous venues include CME, bitmex, okex, and Huobi. Many retail traders both love and hate futures. Without professional trading experience, I do not recommend them: the risks and traps are substantial.
Among the three major domestic exchanges, okex introduced futures first. Many remember repeated customer protests, alleged disconnections, and early settlements. These are no longer unusual. Traders dream of overnight riches, but 100x leverage resembles a slot machine that is hard to leave. Naive speculators: futures are not so simple.
Huobi introduced futures later, perhaps with similar tactics. After almost two months of testing, its futures finally launched today. Its introduction says: “Huobi Contracts are digital currency derivatives. Users can choose to buy long or sell short based on expected price movements and profit from rises or falls. They use settlement by price difference: at expiry, all open positions close at the arithmetic mean of the index price over the final hour, without physical delivery.”
The illustration shows little difference from other exchanges. Before hbdm launched, trading took place on Huobi Global. Compared with okex and bitmex, Huobi futures seem relatively calm, with no especially major incidents, or perhaps I have not heard of them. Alleged disconnections are not new in China; people have become accustomed to them.
After discussing okex and Huobi, why has Binance not launched its own futures trading?
After Tencent's Pony Ma posed a question on Zhihu, “industrial internet” became fashionable. People say the traffic-driven era is over and are moving into offline business, industry, retail, and To B. Communities and companies gradually lose users: once-famous Renren sold itself to doNew, and another internet winter arrived. Tencent is expanding in many directions and forms. The industrial internet may be the second half, but blockchain's traffic dividend may only be starting: few people trade crypto or understand blockchain. Tencent rules through products such as WeChat, Honor of Kings, LOL, and battle-royale games. It built an empire through strong products; Binance may build CZ's own fiat-exchange empire.
After last year's September 4 restrictions, domestic exchanges shut fiat trading. Binance introduced crypto-to-crypto trading rather than RMB trading and won its first million users. Competitors launched overseas crypto exchanges too. Why did Binance still develop its own product path? User experience mattered: its technology was already mature, and multiple trading clients plus friendly UI gave it an advantage. Establish a reputation early and users become accustomed to a platform. Growing word of mouth helped Binance reach the industry's largest trading volume; users exceeded 7.9 million in March. Yet it still did not introduce futures, choosing fiat trading instead.
Founder CZ says Binance will launch fiat exchanges in ten markets, including Uganda, Jersey, Liechtenstein, Malta, and Singapore. On June 29 this year it launched its first, Binance Uganda. In a Cointelegraph interview, CZ said Uganda is interesting because only 11% have bank accounts. That is both a challenge and an opportunity: adopting cryptocurrency may be easier than expanding banking. It is an interesting experiment; Africa is a big market, which is why Binance is there.
Traffic grows with market size. CZ says this digital-currency market still has “1000x room for growth”.
I think Binance has not launched a fiat exchange for the following possible reasons:
First, futures make retaining users difficult. If user A loses 20 ETH through liquidation today, they may resent the exchange and damage its reputation.
Second, Binance began with crypto-to-crypto trading and did not even launch OTC. This suggests it retained its original purpose and avoided legal red lines. Like WeChat not making a WeChat phone, different business models follow different paths.
Third, futures are more specialized than spot. Crypto already has high barriers; explaining contracts to beginners may mean talking past them and losing users.
Exchanges should acquire and retain users in today's blockchain industry. Simply extracting value from users in a market without newcomers may send exchanges, media, and wallets into decline. Internet firms are laying off heavily in this winter, and blockchain is struggling too. Futures are risky; trade carefully.
Risk warning: all Bicong articles are not investment recommendations. Investing involves risk; consider your tolerance, investigate projects thoroughly, and make careful decisions.
Bicong (Bitcoin Beginner), Zhan Qiangwei: contracted Huobi information author and columnist on Jinse Finance, Qianke, Toutiao, Penguin, Jiamiquan, 32know, Zhidian, Bihu, and other platforms.
