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“A bitcoin futures contract allows traders to mitigate price volatility”

-What is the most important thing when choosing an exchange?

-It is important to investigate. There are certain key points when choosing an exchange, although two stand out. First of all, take into account the security of each one, the minimum that they can offer us is a two-factor authentication. You can also check if it offers insurance funds, to protect us or compensate against liquidations or hacks and we can also check that they work with cold wallets and the percentage of funds that are stored in them to guarantee the safety of the funds.

Second, the reputation of the exchange is important. It is very important to verify the legitimacy of the platform we choose. There are many recent platforms that have been involved in scams or hacks.

-Are there differences between a decentralized exchange and a P2P platform?

-The objective of decentralized and centralized exchanges is the same. Give access to high-quality financial tools and services to anyone who requires them and has an internet connection. The main difference is management. Centralized exchanges are managed by an organization or an individual and decentralized ones use tools to avoid using that third person.

These centralized entities have absolute control over the exchange and make decisions about the functions and development of this exchange without consulting anyone. Decentralized platforms are managed in an automated way through smartcontracts and their participants are involved in the decision-making process.

These exchanges provide the possibility of interacting directly between the participants and voting for or against the proposals. The P2P platforms adopt this concept of decentralization, since the exchange happens from end to end, buyer A with buyer B and the intermediate is a custody service that releases the funds to both parties after guaranteeing that all the steps were fulfilled.

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For example, party A and party B agree to buy and sell. Instead of party A giving first and then party B responding, what it does is that both parties send it to the custody center and each receives the counterpart they ask for.

These P2P exchanges match people and behind the negotiation is that small security or deposit account that is released once the conditions are met. In theory, any P2P exchange can constitute a decentralized trade but this does not mean that every decentralized trade is a P2P.

4:48 -Bybit allows trading derivatives of cryptocurrencies How does it work exactly?

-First you have to understand what derivatives are. The simplest way: Derivatives trading is an exchange of contracts that links two parties, buyers and sellers. The different types of derivatives include futures, term contracts, options or perpetual swaps … This concept is applicable to cryptocurrencies.

The fundamental thing is to know what crypto derivatives are, that is, a contract between a seller and a buyer to trade an underlying asset at a specific price. For example, a bitcoin futures contract allows traders to hedge positions to mitigate price volatility by signing these agreements that set an underlying auction price for a bitcoin.

-Is there a real interest in the cryptocurrency futures market?

-A futures contract is an agreement to buy and sell a particular underlying asset at a predetermined price at a specific time in the future. For example, the buyer and the seller reach an agreement on the delivery of five bitcoins for $ 20,000 on December 31, 2021. On this date, the seller is obliged to sell these five bitcoins for $ 20,000 regardless of the market condition at that time and the buyer also has the obligation to buy these five bitcoins.

But buyers and sellers can choose to close their position in the moment before the settlement date. Interest in the futures market is increasing because it is listed on a more normalized, less volatile, more transparent market and with all the guarantees that ensure that the operation will arrive in good terms when the agreed date arrives.

-What advice would you give to a small investor who wants to start in cryptocurrency trading?

-This market presents risk, due to volatility. People who are new to trading should understand some basic concepts and factors as they can play for or against. You have to understand the power of technical analysis, of crypto news, knowing when to risk, which is a good amount to leverage because there is no magic formula. But above all, you have to manage risk management and invest only what you are willing to lose.

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