<p>Chak is not entirely correct. The exchange is the matching engine, but there will be someone else on the other side of the trade. The exchange does not have its own position in futures.</p>

<p>That said, legally each party to the future has the exchange as the counterparty (i.e. there are two separate contracts). This all but eliminates counterparty risk. Compare this with a forward, which is effectively a future struck direct between two parties, with no exchange.</p>

<p>Most exchanges have what are called market makers, which in return for being spared some or all exchange fees, commit to providing a buy and sell price for all (or a high proportion) of the time the exchange is running. So most people in practice are trading with a market maker who is bearing the risk of being on the wrong end of the trade. But you could be trading with anyone, either an individual or an institution who wants the opposite exposure to you.</p>

<p><strong>Update</strong> As Max Vernon says, the Bitcoin futures on CBOE are cash-settled, not physically-settled. Physically-settled would be a poor choice for Bitcoin, because there could end up a situation where not all futures <em>can</em> be settled given the liquidity available. And as the price rocketed as (some) futures sellers had to buy bitcoin, everyone else would hang on to it.</p>

CC BY-SA 3.0
2017-12-13T21:08:47.323Z
To which you might add that settling a BTC Futures Contract thought CBOE is completely settled in cash; that is no actual bitcoin ever changes hands.   See http://cfe.cboe.com/cfe-products/xbt-cboe-bitcoin-futures/contract-specifications for full details.
Hannah Vernon
CC BY-SA 3.0
2017-12-13T14:47:37.193Z
2017-12-15T10:15:19.513Z
2017-12-15T10:15:19.513Z
Phil Whittington
<p>You buy from a seller. Technically you are entering into a contract to buy at a specified future time at a specified price. The exchange is an intermediary which facilities the transaction and acts to secure both parties as to the settlement in the future (a "settling up" in everyday language). In effect, you are making a bet with the seller as to the price at a future date. Even with traditional physical products, very few futures contracts are settled by physical delivery, so it's easy to have entirely-virtual products such as cryptocurrencies. I haven't looked specifically at the details of bitcoin futures, but in general futures settlement may, depending on the exchange and commodity, allow settlement either by delivery by the seller, or entirely in cash. If an exchange allowed bitcoin settlement by delivery, well, that's easy enough for the seller.</p>

<p>Note that even in traditional commodities, the majority of futures sellers are not producers or warehousers of the commodity, but speculators</p>

CC BY-SA 3.0
2017-12-13T14:44:10.507Z
2017-12-13T14:50:57.803Z
2017-12-13T14:50:57.803Z
brec
<p>Bitcoin futures are issued by the exchange itself. So you are betting against the exchange. Futures are like a contract between you and the exchange.<br>
When the contract expires, you as the buyer is obligated to buy bitcoin at a predetermined price and the seller(exchange) is obligated to sell bitcoin to that predetermined price.</p>

CC BY-SA 3.0
2017-12-13T11:27:06.040Z
2017-12-13T11:27:06.040Z
Chak
<p>Since Bitcoin futures are a thing since this week I took a closer look at futures and could not find out who I am buying these from. Since this future is "virtual" there is now "farmer" who I am giving my money and get a product back after the contract expires. Who takes over this role? 
Considering that in this future there are limited resources how does the seller select a price?</p>

<trading><futures><stocks>
Whom am I buying bitcoin futures from?
Miemels
# Whom am I buying bitcoin futures from?

(Asked by: username_0 on 2017-12-13)

Since Bitcoin futures are a thing since this week I took a closer look at futures and could not find out who I am buying these from. Since this future is "virtual" there is now "farmer" who I am giving my money and get a product back after the contract expires. Who takes over this role?
Considering that in this future there are limited resources how does the seller select a price?

**Tags:** trading, futures, stocks


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## 3 answers

### Answer by username_1 on 2017-12-13. Score: 3

username_4 is not entirely correct. The exchange is the matching engine, but there will be someone else on the other side of the trade. The exchange does not have its own position in futures.

That said, legally each party to the future has the exchange as the counterparty (i.e. there are two separate contracts). This all but eliminates counterparty risk. Compare this with a forward, which is effectively a future struck direct between two parties, with no exchange.

Most exchanges have what are called market makers, which in return for being spared some or all exchange fees, commit to providing a buy and sell price for all (or a high proportion) of the time the exchange is running. So most people in practice are trading with a market maker who is bearing the risk of being on the wrong end of the trade. But you could be trading with anyone, either an individual or an institution who wants the opposite exposure to you.

**Update** As Max username_2 says, the Bitcoin futures on CBOE are cash-settled, not physically-settled. Physically-settled would be a poor choice for Bitcoin, because there could end up a situation where not all futures *can* be settled given the liquidity available. And as the price rocketed as (some) futures sellers had to buy bitcoin, everyone else would hang on to it.

> **Comments:**
> **username_2**: To which you might add that settling a BTC Futures Contract thought CBOE is completely settled in cash; that is no actual bitcoin ever changes hands.   See http://cfe.cboe.com/cfe-products/xbt-cboe-bitcoin-futures/contract-specifications for full details.  

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### Answer by username_3 on 2017-12-13. Score: 1

You buy from a seller. Technically you are entering into a contract to buy at a specified future time at a specified price. The exchange is an intermediary which facilities the transaction and acts to secure both parties as to the settlement in the future (a "settling up" in everyday language). In effect, you are making a bet with the seller as to the price at a future date. Even with traditional physical products, very few futures contracts are settled by physical delivery, so it's easy to have entirely-virtual products such as cryptocurrencies. I haven't looked specifically at the details of bitcoin futures, but in general futures settlement may, depending on the exchange and commodity, allow settlement either by delivery by the seller, or entirely in cash. If an exchange allowed bitcoin settlement by delivery, well, that's easy enough for the seller.

Note that even in traditional commodities, the majority of futures sellers are not producers or warehousers of the commodity, but speculators


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### Answer by username_4 on 2017-12-13. Score: 0

Bitcoin futures are issued by the exchange itself. So you are betting against the exchange. Futures are like a contract between you and the exchange.  
When the contract expires, you as the buyer is obligated to buy bitcoin at a predetermined price and the seller(exchange) is obligated to sell bitcoin to that predetermined price.


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