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Monday, May 20, 2024

What are blockchain bitcoin contract transactions and spot transactions?

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When it comes to encrypted digital currency transactions, most people only know or have operated spot transactions; buying digital currency, such as buying bitcoin, selling can make a profit if the price rises.

However, the current blockchain digital currency trading has undergone development and innovation, and there is also the existence of futures trading. Still, the target of traditional futures is a particular commodity in the real world, such as rebar and cotton, and the target of digital currency futures is a particular digital currency. Assets. The margin in digital currency futures transactions is not a legal currency but digital currency. The margin is paid in the form of virtual currency or virtual futures contracts. In order to distinguish it from traditional futures, futures trading in digital currencies is often referred to as contract trading instead of the traditional futures name.

Simply put, a contract transaction refers to an agreement between the buyer and the seller to receive a certain amount of a particular asset at a specified price at a specific time in the future. The exchange also specifies the type, time, quantity and other information of the commodities to be traded in detail. Contract transactions also further clarify the rights and obligations that buyers and sellers have.

Contract trading is also a kind of financial derivative. It is relative to spot market trading. Users can choose to buy long or sell short contracts by judging the rise or fall in futures contract transactions to obtain the price increase or decrease. income.

According to the difference in futures trading, trading methods can be divided into perpetual and fixed-term contracts. The main difference is that term contracts have a fixed delivery date, while perpetual contracts do not. Among them, fixed-term contracts are divided into three categories according to the delivery time: current-week contracts, next-week contracts, and quarterly contracts.

What are the ways to trade so many contracts?

Contract trading is divided into two ways: open long (bullish) and open short (bearish). The existence of futures also adds a short-selling mechanism to the market. For example, the current Bitcoin price is 8,000 US dollars. At this time, you feel that the price is going to rise. You can choose the corresponding leverage to make more. When the price rises to a specific price, you can profit by throwing out the contract. The pattern of opening short is the opposite of opening long.

However, spot transactions and contract transactions are also very different, specifically as follows:

First, the target of the sale is different.

Spot transactions are the commodities themselves, with samples and physical objects. Most of our daily transactions are spot transactions. The object of contract trading is a standardized contract. This contract contains standardized information such as the agreed transaction type, transaction time, transaction price, and transaction quantity.

Second, the scope of the target is different.

The scope of spot trading is all commodities that can be circulated. Contract trading is mainly bulk physical commodities (energy products, metals, etc.) and financial products (such as stocks, securities, etc.).

Third, the trading rules are different.

Spot transactions are cleared when the goods arrive; no matter how long it takes, they are cleared once or twice. Contract transactions are for delivery at a particular time in the future.

Finally, the purpose of the transaction is also different.

A spot transaction is the completion of the acquisition or transfer of ownership of commodities by both parties in a relatively short period;

The purpose of contract trading is not only to deliver the physical goods at maturity but also to transfer the uncertainty risk caused by price changes in the spot market or obtain profits from price fluctuations in the contract market through contract trading.


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