"C[a]n anyone explain how future contracts work specifically when do they have to actually buy the underlying asset"
It appears that the Bitcoin Future Contract on CME will be cash settled in US dollars against a Bitcoin Reference Rate (BRR), and not "physically" deliverable as with some other commodity contracts.
Example: If you buy one bitcoin contract (five bitcoin equivalents) at the price of $8,000 and the BRR is $9,000 at contract expiry, CME pays you $5,000. They don't sell you five bitcoin at $8,000 each.
There is daily margining process, and I hate to think what the initial margin will be given Bitcoin volatility....
