What is Bakkt?
“Bakkt is designed to enable consumers and institutions to seamlessly buy, sell, store and spend digital assets. Formed with the purpose of bringing trust, efficiency, and commerce to digital assets, it seeks to develop open technology to connect existing market and merchant infrastructure to the blockchain.”
Kelly Loeffler, ICE’s head of digital assets, who will serve as CEO of Bakkt, in the press release announcing the launch said:
“We are collaborating to build an open platform that helps unlock the transformative potential of digital assets across global markets and commerce.”
Who created Bakkt?
Bakkt is created by Intercontinental Exchange (ICE), owner of the New York Stock Exchange (NYSE).
Who Is Behind Bakkt?
There are “BIG” companies behind Bakkt.
The company has some high-profile backers and investors:
Alan Howard, Pantera Capital, Fortress Investment Group, Eagle Seven, Galaxy Digital, Protocol Ventures, Susquehanna International Group, and Horizons Ventures.
Moreover, Bakkt is also working with Microsoft and Starbucks.
We already know that ICE has built the entire system on Microsoft’s Azure cloud services.
In addition, there are news about Starbucks will accept crypto payments via Bakkt in its cafes.
Bakkt raised a total of $182.5 million in its first round of funding at the end of December.
What Services Will Bakkt Offer?
Bakkt has four key services:
- Retail Payments
It provides an easy and less costly way for buyers and sellers for the cryptocurrency market.
Bakkt will allow people to trade crypto using futures contracts.
- Savings Plans
There are plans to move into the 401(k) and IRA market.
- Wallets and Insurances
Bakkt will provide wallets for coin storing and also insure it against hacks.
Why Bakkt is too Important for the Market?
Bakkt will bring some benefits to the cryptocurrency market:
For more adaption, market needs security. There are too many people that afraid of involving the cryptocurrency market due to the security concerns.
Hacks are the main problem if we are talking about the security and Bakkt will introduce “federally regulated” warehousing. ICE will be working with authorities to provide safe and secure storage of digital assets.
Companies Behind Bakkt
Microsoft, Starbucks etc. can bring a huge momentum to the market.
Bakkt will work in tandem with the Commodity Futures Trading Commission (CFTC) to ensure all investments are legal and tax compliant before any capital changes hands.
In addition, governments and regulators also approve the platform which can directly bring the institutional investment.
Volatility sometimes can be good for traders. However, most of the investors are going away because of the high volatility of the market.
Currently, just in a day, you can win/lose around 50% which shows that the market is still volatile.
For more institutional investment and mass adaption, the market needs to be less volatile and Bakkt may solve it.
Bakkt’s main offering will be Bitcoin futures and clearinghouse for a single day, Bitcoin contracts for physical delivery. This is new for the market as the future contracts will be physically-settled rather than cash-settled.
It means that Bitcoins will need to be delivered on the specified date rather than paying/receiving the difference between prices in dollars.
This can boost the price as it is physical buying and selling.
We are still in the early phase for mass adaption.
A lot of people do not understand nor care about the cryptocurrency market.
The use of the Bakkt app combined with the involvement of high street companies like Starbucks may start to change the situation.
When Will Bakkt Be Available?
The company has already postponed date a couple of times and still, it is not clear the exact launching date. There are rumors that more regulations needed to launch the system.
In my opinion, Bakkt and the involvement of institutions will bring momentum to the market. It may also open a door for Bitcoin ETF which can boost the price and popularity of Bitcoin.
Especially, Starbucks and daily usage of the cryptocurrencies is the key. Moreover, companies behind Bakkt may change the way of the market.
Due to the physically-settled element of Bakkt’s product, it will likely have a noticeable effect on the price trend of the digital asset.
On the other hand, I am concerned about the regulations and the third party involvement which is the opposite of the Bitcoin philosophy.