The Wall Street Journal recently reported the CME Group may be in the process of issuing futures contracts on bitcoin in the near future. Anyone who has done any research on the role the CME plays in the pricing of commodities recognizes in some instances, gold and silver in particular, the CME artificially inflates supply in an apparent attempt to suppress price. Is it possible futures contracts will have the same effect on bitcoin?
In answering this question, one must determine if the CME pricing will be the primary price discovery mechanism used by the public for the purchase or sale of bitcoin. This is a difficult question to answer due to the multi-faceted role bitcoin plays, not only in America but, worldwide. Westerners primarily view bitcoin as a commodity such as gold or silver. It is simply a buy and hold strategy. Once a sought after price is reached on the exchange of the holders choice, the bitcoin is sold for a monetary gain in the nationally currency for the most part. This is not how bitcoin is necessarily used in other parts of the world. Current use cases exist where bitcoin is used in daily transactions and performs more as a currency than commodity.
Additionally, the personal storage of bitcoin is vastly different from other commodities. Vaults are needed for gold and silver and acreage is required for cattle, bitcoin requires a computer, phone or a piece of paper. Technically, it can be held in one's mind if someone is that paranoid/environmentally friendly.
I did not write this article to answer this question. The link below leads to the article and it is so recent I have yet to truly explore every aspect of this hypothetical situation. I wrote this article to hopefully spur some conversation because I truly hope the free market can create price discovery but given the current state of the world I am having doubts.