Post
Topic
Board Mining
Re: difficulty futures contracts for miners to hedge
by
brian_23452
on 08/07/2014, 22:34:59 UTC
What you are describing isn't a futures contract, but rather a form of gambling.  The first example you gave, where I agree to trade you 6 barrels of oil on September first for 1 bitcoin, is a futures contract.  Assuming we don't choose to exchange cash instead, you will get your 6 barrels of oil  and I will get my one bitcoin. 
The second example, what difficulty will be on September first, isn't a contract at all, nothing is being exchanged.  It is simply a bet on a future  life event.  Any gambling house would be well equipped to lay odds and accept wagers on the event. 

A cash-settled future is a bet, but the idea is here to avoid the use of an intermediary and counterparty risk.
A bet such as this can be used to hedge exposure, so isn't necessarily gambling.

How do you foresee being able to hedge your mining position with these instruments, whatever we call them?