CFDs Traders Are Trading in a “Closed Box”: Can Crypto Perpetuals Challenge This?

For decades, retail traders have sought tools that offer both access and agility in global markets. Yet, many of the instruments available to them while marketed as innovative remain rooted in outdated models that favor intermediaries over transparency. One such product is the contract for difference, or CFD.

From Institutions to Retail

CFDs emerged from the financial engineering playbook in London in the 1990s. Initially built for institutions looking to skirt stamp duties and taxes, they quickly became a retail product, sold as an easy way to trade global markets with leverage.

Sure, they opened up access. But that access came wrapped in an opaque, broker-controlled package that still feels stuck in the last century.

In the 1920s, these places were called bucket shops where traders placed bets on the market, but the house took the other side of every trade. If you made money, they lost money. So naturally, they hunted stops, refused fills, and did whatever they could to tilt the odds. CFD brokers are the modern-day bucket shops.

Read more: Kraken Puts Cyprus Licence to Use—Launches Crypto Derivatives in Europe

The Entry of Perpetuals

In 2016, BitMEX launched the first perpetual futures contract. It looked like a regular futures contract, but with one key difference: no expiration. That one feature solved the biggest pain in futures trading, rolling over contracts and creating a product that tracks the spot market almost perfectly, without the need for a broker to set prices.

Fast forward to 2024, perpetual futures are now the dominant way people trade crypto. Over $58.5 trillion in perp volume was traded across the top 10 centralized exchanges last year alone.

Markets don’t just move—they dip, spike, and everything in between.Ever wondered how futures and perpetuals work in crypto?From soybeans to Bitcoin, these contracts keep the markets turning.Explore the mechanics in our latest video👇 pic.twitter.com/0BPLFzq5er

The Problem With CFDs

You're not trading with other market participants when you trade a CFD. You're trading against your broker. They decide the price you get. They determine the spread. They choose the financing rate. They can widen the spread whenever they want. Delay your execution. Requote your order. Hunt your stops.

Most brokers run a B-book, which means they take the other side of your trade—when you lose, they win. They hope you blow up so they can keep the profit.

During the 2020 oil crash, CFD brokers quoted prices totally out of sync with the actual futures markets. Some traders stopped at levels that didn't exist in the real world. Why? Because the broker could.

CFDs are banned for retail in the U.S., while brokers are not allowed to offer retail crypto CFDs in the UK. Why? Because the mechanics are stacked against users.

Contract-for-difference (CfD) are popular in Europe to support renewables (and probably nuclear). They are great for ensuring stable revenues. But they remove the market incentives. Can we find a better alternative? Maybe yes, with financial CfD.Thread 🧵1/12 pic.twitter.com/HR9DE3oBdW

Related: The Challenge from Crypto Exchange Is Here—Can FX and CFDs Brokers Survive?

Perpetual Futures Are Transparent

Perpetual futures are traded on public order books, offering full transparency into market depth, actual trades, and real-time spreads. Prices are determined by open market dynamics, not by intermediaries that profit from user losses.

When the price of a perpetual diverges from the spot, funding rates automatically adjust to bring it back in line. There are no backroom deals or hidden fees, just pure market forces at work.

Most importantly, anyone can trade in the order book. It's an open market with no privileged participants. This is a true market structure: transparent, inclusive, and competitive. Bitcoin perpetual futures alone have attracted $100 billion in open interest. Binance, OKX, and Bybit regularly trade $30 billion in BTC perpetual futures daily.

Perpetual futures are simple and efficient. They allow traders to go long or short with deep liquidity, high leverage, and limited risk, you can only lose what you put in. This makes them a practical choice for both retail and institutional traders.