I am a futures trader who has used bitcoin for several years now, and I'm working with a team of former futures exchange employees to design a decentralized futures exchange for the top cryptocurrencies for the purpose of helping miners hedge their future production/generation of coins.
For example, if you are worried about difficulty increases or BTC/USD price drops in the future, you could sell a contract for 5(or however many) bitcoins, expiring in 3 months on our exchange for however much you or the highest current bidder in the futures market thinks it will be worth then. The contract will be backed up by a collateral deposit of the amount of bitcoins promised in the contracts, at current market prices, and if in 3 months, bitcoin drops or difficulty increases, you still will have secured the bitcoin prices of the time you sold your futures contract to the bidder, and left with a premium profit of (futures sold price- 3 month later's price), while the buyer of your futures contract gets your delivered bitcoins as promised but at a lower price than he paid for futures contract. However, like all futures exchanges, if the price of bitcoin in 3 months, soars above the futures contract price at time of sales, you will "miss out" on the extra premium increase but still have secured the price you wanted at the time of sales. The purpose of this is the same purpose as crude oil producers or corn farmers selling futures contract on their production to hedge against unknown conditions and market movements. They have more control over their business and mining production by guaranteeing themselves a price they want to sell bitcoins at, however many months in the future, no matter if bitcoin crashes hard or rises hard. We will either charge a small transaction cost in BTC/ETH or USD to keep our exchange running and employees paid, or crowdfund an ICO to make a coin to use as "gas" to power transactions with.
I wanted to get your opinion on this project, and ask if it would be of value to you guys as miners. I'm very open to hearing about how you think we could improve on this process to facilitate greater liquidity and benefit between miners, users or investment funds, and speculators. Feel free to stress test our project idea, we are very open to constructive criticism, as we want to truly benefit the entire crypto community.
Thank you for reading.
