What Is the Difference between an Inverse Perpetual Contract and a Linear Perpetual Contract?

In a linear perpetual contract, the collateral and the profit/loss (P&L) are denominated in the same currency, typically a stablecoin like USDT. This makes P&L calculations straightforward.

In contrast, an inverse perpetual contract uses the base asset, such as Bitcoin (BTC), as collateral, while the contract is valued in a fiat currency like USD. This introduces currency risk, as the value of the collateral fluctuates with the price of the base asset.