> for manipulation purposes like borrowing for shorting
I see this repeated a lot and I'm still not entirely clear why people feel this way. Most major markets in the world have futures/borrow mechanisms, and one of the key reasons is that it allows shorting.
Short selling is a critical element to any healthy market, and we've seen time and time again that markets without well functioning short selling are far more vulnerable than those with (i.e. real estate).
For instance, let's presume that crypto takes off, and business start accepting crypto for contractual obligations. If my future costs are in fiat, but future revenues are in crypto, I have a big mismatch with a very risky asset. A futures market (or shorting) allows me to hedge that risk out and protect myself against future volatility. I can lock in my fiat today, to ensure that I can cover my future costs. Without such a mechanism, I might not be able to risk a collapse in crypto markets.
Mature features (like borrows/futures) in crypto markets should aid in adoption.
I think the issue isn’t that shorting and other functions exist, but that these aren’t carried out by most retail investors. So frequently financial firms will benefit on this functionality using the base accounts of their customers.
So the introduction of this intermediation creates value possibility for large firms away from individuals.
Shorting is available to pretty much everyone now, especially with Robinhood et al and easy access to options markets (of course most people don’t understand vol and probably shouldn’t trade options). But it’s been easy to short even on the legacy brokers for as long as I can remember (a decade plus).
The issue with shorting is that you have theoretically unlimited downside which means greater risk and familiarity with concepts like margining. That is often outside the grasp of the average retail investor.
I see this repeated a lot and I'm still not entirely clear why people feel this way. Most major markets in the world have futures/borrow mechanisms, and one of the key reasons is that it allows shorting.
Short selling is a critical element to any healthy market, and we've seen time and time again that markets without well functioning short selling are far more vulnerable than those with (i.e. real estate).
For instance, let's presume that crypto takes off, and business start accepting crypto for contractual obligations. If my future costs are in fiat, but future revenues are in crypto, I have a big mismatch with a very risky asset. A futures market (or shorting) allows me to hedge that risk out and protect myself against future volatility. I can lock in my fiat today, to ensure that I can cover my future costs. Without such a mechanism, I might not be able to risk a collapse in crypto markets.
Mature features (like borrows/futures) in crypto markets should aid in adoption.