What is the difference between crypto derivatives and spot trading?

Spot trading involves buying and selling cryptocurrencies for immediate delivery at current market prices. You own the actual coins. Derivatives like futures and options let you speculate on price movements without owning the underlying asset. With derivatives, you can use leverage to control larger positions with less capital, but you face liquidation risk if prices move against you. Spot trading requires more upfront investment but has no liquidation risk. Derivatives are complex financial instruments better suited for experienced traders, while spot trading is simpler for beginners. Most cryptocurrency exchanges offer both, but derivatives trading is restricted in some countries due to regulatory concerns about investor protection.