No matter how much I am thinking about it, I can't understand #Bitcoin #derivatives like futures and options.
Especially the fact that I couldn't find any physical delivery contracts — for some unknown reason they're always cash-settled, which doesn't make sense to me since it's basically just gambling with the candlestick chart instead of a roulette table, and you don't even touch the underlying asset????
How are you supposed to even use these for anything serious, e.g. hedging against Bitcoin falling short-term as a Bitcoin-native business who nevertheless still depends on fiat for some transactions? If the put option (that is supposed to give you the right to sell your sats at a fixed price denominated in fiat) you just bought is cash-settled, where does the Bitcoin even come in then?
(Of course, a case could be made that you should promote the circular economy and strive to always pay in sats — but everything takes time, and sometimes dealing with fiat money is unavoidable, I guess).
Can someone explain it to me? I promise to #zap the best three answers 500 sats each ✨