Will Cryptocurrency Replace Fiat Money

The present diploma paper is concentrated on the analysis of the bitcoin market, the aim of this work is to identify the relationship between spot prices and futures activity (futures volume and open interest), representing hedging and speculative activity of traders. In the work were chosen namely futures to study among other derivatives due to the fact that futures contracts are the first financial innovation on bitcoin market that has been already trading since December of 2017 on the two world's largest exchanges for derivatives products that had been vying for the launch of the new financial product connected with bitcoin on traditional U.S. regulated market - CME Group Inc. (Chicago Mercantile Exchange) and CBOE Global Markets Inc. (Chicago Board Options Exchange). However, at that time regulated exchange on bitcoin options has already existed - LedgerX, small U.S. options exchange, the executor of bitcoin swap trade (SEF) and also Derivatives Clearing Organisation, which is dominated by CME and CBOE when Commodities and Futures Trading Commission freed the way for these exchanges to offer bitcoin futures contracts on the regulatory manner. The research paper is based on comparative analysis between three investment assets, including stocks, fiat currencies and commodities, and bitcoin. This is merely because there were no previous empirical researches of bitcoin derivatives and consequently the analogy is needed to be carried out to make relevant research and conclusions ultimately. I believe that possible inclusion of bitcoin in the list of regulated financial derivatives will promote its expansion in financial world and integration in different investment strategies that will help investors with shifting risk that carries the underlying asset’s price movements. Moreover, the existence of at least futures, options and swaps on bitcoin is only the beginning of successful financial market performance, which will develop in future in more complex derivatives.