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A <a href="https://hackernoon.com/tagged/derivative" target="_blank">derivative</a> is a financial contract between two or more parties that derives its value from an underlying asset ie. stocks, commodities or cryptocurrencies. An agreement to buy or sell a particular asset at a predetermined price and a specified time in the future. Derivatives do not have inherent or direct value by themselves. The value of a derivative contract is purely based on the expected future price movements of the underlying asset.