The crypto space is in the midst of change as the institutional world entertains the idea of a new asset class and looks ahead for ways to gain exposure. As these markets evolve, there will be the development of new products to solve the needs of investors and speculators. The iterations of development so far have been BTC futures that have been limited in term structure and volume, a small amount of highly collateralized options and a few basket or index type funds.
So what can we look for in the development of cryptos as an asset class and which products will aid in the development. A forward contract on alt coins is the most likely progression which will help develop a new distinct asset class. These forwards, also called contract for difference or non delivered forwards, allow the investor, entrepreneurs and speculators the ability to fix a price in the future against the actual price at time of expiration. One would be buying or selling at a fixed price with the floating price to be determined at expiration with a cash or even physical (delivered) settlement on the difference. A forward contract is similar to a future with the main difference of being an over the counter rather than an exchange listed instrument.
So why is this important to the development of this asset? If we consider that some of these alt coins to be something akin to currencies or commodities, being able to lock in a price can alter the risk of a portfolio. Futures or forwards don't tell us what the price of something is in the future, but indicates what one is willing to transact in the any given time period. It gives the market a term structure which provides the ability to calculate the cost of carry and whether if it's positive or negative. This not only allows for risk mitigation but brings more liquidity to the market by allowing a broader group of investor or traders exposure while not having to worry about wallets. A forward curve would also facilitate lending which would also be a boost to the market's liquidity as traders would be able to take short positions.
I believe a forward market will be a tremendous lift to this burgeoning asset class allowing for a diversity of players in the market, while helping mitigate risk and providing liquidity. One thing any student of markets can tell you, where there is liquidity and volatility- there will be interest.