dr.fred on Nostr: anyone interested in about how bitcoin futures work on a network which cannot be ...
anyone interested in about how bitcoin futures work on a network which cannot be controlled by anyone?
Bitcoin futures work on a decentralized network, meaning that no single entity controls the system.
Bitcoin futures are traded on decentralized exchanges (DEXs) or centralized exchanges (CEXs) that are regulated by the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). These exchanges are designed to operate independently, without a central authority controlling the flow of transactions.
Smart contracts: Futures contracts are represented by smart contracts, which are self-executing programs that automate the settlement and delivery of the underlying asset (Bitcoin) when the contract expires. These smart contracts are deployed on blockchain networks, ensuring transparency and immutability.
Order book: The exchange maintains an order book, where buyers and sellers submit their bids and offers for Bitcoin futures contracts. The order book is decentralized, meaning that no single entity controls the prices or the flow of orders.
Matching engine: The exchange’s matching engine matches buy and sell orders based on price and time priority, ensuring that trades are executed fairly and efficiently. This process is automated, eliminating the need for human intervention or central authority.
Settlement: When a futures contract expires, the smart contract automates the settlement process. The buyer and seller agree on the settlement price, which is typically based on the CME CF Bitcoin Reference Rate or other benchmark prices. The settlement process involves transferring the underlying Bitcoin asset, without the need for intermediaries.
Liquidity providers: Market makers and liquidity providers participate in the market, providing liquidity and helping to maintain order book depth. They operate independently, without any central authority controlling their actions.
In summary, Bitcoin futures on a decentralized network works through:
Decentralized exchanges and smart contracts
Automated order book and matching engine
Settlement processes without intermediaries
Independent liquidity providers
Bitcoin futures work on a decentralized network, meaning that no single entity controls the system.
Bitcoin futures are traded on decentralized exchanges (DEXs) or centralized exchanges (CEXs) that are regulated by the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). These exchanges are designed to operate independently, without a central authority controlling the flow of transactions.
Smart contracts: Futures contracts are represented by smart contracts, which are self-executing programs that automate the settlement and delivery of the underlying asset (Bitcoin) when the contract expires. These smart contracts are deployed on blockchain networks, ensuring transparency and immutability.
Order book: The exchange maintains an order book, where buyers and sellers submit their bids and offers for Bitcoin futures contracts. The order book is decentralized, meaning that no single entity controls the prices or the flow of orders.
Matching engine: The exchange’s matching engine matches buy and sell orders based on price and time priority, ensuring that trades are executed fairly and efficiently. This process is automated, eliminating the need for human intervention or central authority.
Settlement: When a futures contract expires, the smart contract automates the settlement process. The buyer and seller agree on the settlement price, which is typically based on the CME CF Bitcoin Reference Rate or other benchmark prices. The settlement process involves transferring the underlying Bitcoin asset, without the need for intermediaries.
Liquidity providers: Market makers and liquidity providers participate in the market, providing liquidity and helping to maintain order book depth. They operate independently, without any central authority controlling their actions.
In summary, Bitcoin futures on a decentralized network works through:
Decentralized exchanges and smart contracts
Automated order book and matching engine
Settlement processes without intermediaries
Independent liquidity providers