Derivatives are financial contracts whose value depends on an underlying reference, such as Bitcoin, an interest rate or a market index. Trading a crypto derivative creates contractual exposure; it does not necessarily transfer ownership of the cryptocurrency.
Main contract types
Dated futures have an expiration and specified settlement terms. Perpetual contracts generally have no scheduled expiry and commonly use funding payments to help align their market price with a reference price. Options give buyers a right defined by the contract, while sellers take on the corresponding obligation.
These differences determine how positions respond to price changes, how long exposure lasts and what payments may arise.
Uses and limitations
A holder of BTC might sell a BTC future to offset part of the risk of falling prices. Another trader might buy a derivative to speculate on a rise. Neither use guarantees a favorable outcome.
Assess the underlying reference, contract size, collateral, settlement currency and payoff before comparing products. Leverage can magnify losses relative to posted margin, and positions may be liquidated. Funding, fees, imperfect hedges, liquidity and platform or counterparty risk also affect results.