To understand what Bitcoin Futures are, we first need to define the concept of Futures. Fortunately, this is very simple: a Future is an agreement to buy or sell an asset on a specific future date at a specific price. Once the so-called Futures contract has been agreed, both parties have to buy and sell at the contractual price, regardless of what the actual market price is on the date the contract is due to be executed.
So, how does this translate to Bitcoin Futures? Well, it's much the same as the situation outlined above. Investors will determine whether to sell high or low. For example, if they decide on the latter, they essentially agree to sell their Bitcoin as the current price, even if it's a lot less at the contract termination date. They also have the option to buy back the Bitcoin at the reduced rate, thus protecting their investment and/or turning a profit.
This article is an installment in our brand new Bitcoin 101 series — a set of articles dedicated to answering all of your most basic Bitcoin-related questions and queries, including where to spend Bitcoin, how to mine Bitcoin, how to spend Bitcoin using a Visa debit card, and the safest and easiest way to convert Bitcoin to USD. Want to see the current Bitcoin price? We have an entire section dedicated to that as well.