How Does a Futures Contract Differ from a Forward Contract in the Context of Cryptocurrency Trading?

Futures contracts are standardized, traded on centralized exchanges, and typically settled daily with a clearing house acting as a counterparty. Forward contracts, however, are customized, traded over-the-counter (OTC) between two parties, and carry higher counterparty risk.

While both are agreements to buy or sell an asset at a set price on a future date, futures offer more liquidity and less counterparty risk due to standardization.