A futures contract is a financial agreement to buy or sell an asset at a predetermined price at a specific future date. In the context of cryptocurrencies, these contracts allow traders to speculate on the future price of digital assets like Bitcoin or Ethereum.Traders can take either a long position, anticipating that the price will rise, or a short position, betting that it will fall. This mechanism can be used for hedging risks or making profits based on price movements.Futures contracts are typically traded on exchanges and often require a margin deposit, which is a fraction of the total contract value. This leverage can amplify gains but also increase potential losses.One key feature of futures contracts is that they do not require the actual purchase of the underlying asset. Instead, traders settle their positions in cash or through a physical delivery of the asset, depending on the contract terms. This allows for more flexibility and opportunities in trading without holding the asset directly.