Bitcoin Futures Aren't a Big Hit, and That's Good

The "normal" financial world on Monday got access to the biggest investing craze of the year, bitcoin -- and didn't immediately bet the farm on it or against it. It's possible that decentralized cryptocurrencies just aren't made for the mainstream, which can be both an advantage and a drawback.

Bitcoin futures traded on regulated exchanges -- starting Monday, the Cboe, soon also the CME and Nasdaq -- have the potential for a big audience expansion for the cryptocurrency. They provide access to institutional investors who cannot deal on bitcoin exchanges because of their unregulated nature and the risks it entails. They also reduce the significant friction involved in trading bitcoin itself, such as long waits for clearing (at the time of this writing, there were some 90,000 unconfirmed transactions -- but in recent days that number has spiked above 200,000, with corresponding rises in transaction costs). The bitcoin community is working on ways to pre-clear transactions before they're recorded in the main ledger, but that's a risky game because of the possibility of hacks. A transaction on a regulated exchange, meanwhile, is guaranteed to clear. It's easy to short the futures contracts, too.