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What are crypto derivatives exchanges
What are crypto derivatives exchanges
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What are crypto derivatives exchanges

By Marco Cavicchioli - 27 Mar 2021

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Not only are there crypto exchanges that allow the trading of cryptocurrencies and tokens, but there are also crypto derivatives exchanges

Crypto derivatives can often be found on the same crypto exchanges as traditional crypto exchanges, but not on all of them. 

Traditional crypto exchanges are those that allow users to deposit their funds, whether in cryptocurrencies or fiat currencies, to be used to buy or sell cryptocurrencies, and then possibly withdraw them. 

In these cases, cryptocurrency tokens, such as BTC, ETH, etc., are deposited, traded and withdrawn. 

What to buy on crypto derivatives exchanges

However, some exchanges also offer the possibility of buying and trading derivatives

These are contracts that are usually issued by the exchange itself and can only be bought and traded within the platform. 

The most classic case is the so-called CFD, or Contract For Difference, which can only be used for trading.

In other words, their purpose is only to allow users to buy and sell. 

Over the past few years, futures contracts, both fixed-term and perpetual, have become very popular, and although they differ from CFDs, they still only allow pure speculation. 

In fact, only the so-called spot exchanges, i.e. those that allow the direct exchange of cryptocurrency tokens, also allow the withdrawal of tokens, e.g. to proprietary wallets. 

For example, buying bitcoin (BTC) on a classic spot exchange allows the buyer to withdraw the purchased BTC and send it to his own external wallet. In this way, the user becomes the true and sole owner of the purchased bitcoin and can store them independently, safe from any problems the exchange may have. 

However, crypto derivatives offer speculators special features that tokens don’t have, allowing them to trade in a more advanced and structured manner. Spot exchanges, on the other hand, are rather simple. 

There are not many cryptocurrency spot exchanges that also offer derivative products. These are generally advanced speculative instruments for more experienced investors, so many crypto exchanges that are not aimed at professional investors do not offer them. 

However, it should be noted that crypto exchanges which offer derivatives have been very successful, especially recently. 

Marco Cavicchioli
Marco Cavicchioli

Class 1975, Marco teaches web-technologies and is an online writer specializing in cryptocurrencies. He founded ilBitcoin.news, and his YouTube channel has more than 25 thousand subscribers.

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