Futures have something called open interest and an expiration. They come into existence because both a buyer and seller are willing to take opposing positions. When this happens, open interest increases correspondingly.

Let’s say you believe btc will rise and you bid to buy one CME futures btc contract at 42000. I am willing to sell (short since, let’s say, I don’t have any contracts to sell) at 42000 and we have now created the future contract out of thin air. Upon expiry money has changed hands between us daily (mark to market pricing) between our futures trading accounts (customer segregated funds at our respective clearing firms to be exact), and price was tied to the underlying (spot — the real btc market) price at all times.

All we did was bet against each other with the “score” being the actual btc price. The “cash settled” part means we don’t touch btc at all, we settle the bet between us in cash. If it sounds too obvious or if it seems like you’re missing something, you probably get it. It’s simple, and there are a lot of complexities underneath the surface (expiration months, cost of carry, contango and backwardation), but at the core it’s just a bet on the price with one party believing price will rise and other believing it will fall. Nothing less or more.

In practice there is interplay between futures and spot markets’ prices, and this opens up a can of worms about liquidity and how futures could be used to “stabilize” a commodity (read up on hunt brothers cornering the silver market for an example of govt intervention into a futures market)