Bakkt created some buzz back in August when it was announced by the Intercontinental Exchange (ICE), which operates 23 regulated marketplaces and exchanges globally, would be launching a crypto startup named Bakkt. ICE which also owns the New York Stock Exchange and other global markets, announced they are aiming to launch Bakkt in late November, early December.
What will Bakkt address?
The goal of Bakkt and of ICE overall, is to give the public a federally regulated marketplace for Bitcoin. With the aim of transforming Bitcoin into a global currency, ICE has partnered with some of the United States’ most well-known enterprises. According to Fortune Magazine, with Microsoft, the Boston Consulting Group, and Starbucks on board, Bakkt offers the ability “for major money managers to offer Bitcoin mutual funds, pension funds, and ETFs, as highly regulated, mainstream investments.”
Kelly Loeffler, who has been ICE’s Chief Communications & Marketing Officer and worked for ICE for 16 years, was announced CEO of Bakkt in August. Working closely with ICE founder and chief, Jeff Sprecher, who happens to be her husband, Loeffler has seen personally what it takes to create a mainstream trading empire. For those who don’t know, the Intercontinental Exchange is one of Wall Street’s go-to markets.
On October 15, posted on Medium, Loeffler made a significant announcement pertaining to Bakkt. Adam White, who helped build America’s largest trading platform for digital currencies, Coinbase , will be joining Bakkt. With White’s expertise, Bakkt hopes to make their vision come to market more quickly. After all, Coinbase serves over 32 countries and in six years has more than 25 million customers.
What this means for Bitcoin:
For those who have followed Bitcoin and its value, Bitcoin surged to $19,000 in December of 2017, only to fall to roughly $6,300 today. When asked if this is a red flag for cryptocurrencies, specifically Bitcoin, White in an interview with Fortune Magazine explained “Far too often the public looks at price and market size to determine the progress in digital currencies,” says White. “What matters is that the number of daily transactions for all cryptocurrencies is up year over year. And we’re also seeing the introduction of new protocols from open source software developers that make cryptocurrencies far easier to use.” Bakkt overall does not seem to fear these fluctuations in the value of Bitcoin. In fact, in the same interview Loeffler weighed in on her beliefs on the current state of crypto. “The digital market is fragmented like the energy market in the early 2000s. ICE was the pioneer attracting more and more institutions to trade energy, which is what created today’s liquid market,” she says. “We’re about to see a revolution on the same scale in cryptocurrencies.”
Overall, I believe we could see the value of Bitcoin double in the next year in part because of Bakkt. With Bakkt already working with Microsoft and Starbucks, I see more companies joining in too. Internally, with their hire of Adam White, I see this as the beginning of creating an even more powerful team to grow the company even more. The most important thing about Bitcoin is getting it somewhere, where it is regulated. To some extent keeping volatility low hinges on regulation.
The fear over security of your cryptocurrency has been another issue too that is addressed with Bakkt. With a wide range of security solutions integrated into Bakkt’s platform, fraudulent transactions and market manipulation can be tracked.
Bakkt is keeping in mind the failure of Bitcoin ETF applications earlier this year. As Bakkt CEO Kelly Loefffler explains, “a critical element to price discovery is physical delivery. Specifically, with our solution, the buying and selling of Bitcoin are fully collateralized and pre-funded. As such, our new daily Bitcoin contract will not be traded on margin, use leverage, or serve to create a paper claim on a real asset. This supports market integrity and differentiates our effort from existing futures and crypto exchanges which allow for margin, leverage, and cash settlement.” Because the Bakkt solution is already funded and not reliant on future markets and growth that hasn’t happened the platform is already ahead of those ETF applications that are being rejected.
Bakkt and its solution working to mainstream Bitcoin, is huge for cryptocurrencies in general. With solutions such as the Lightning Network, which is currently working to expedite payments and transactions involving cryptocurrencies off the blockchain, the world will be introduced to a new world of payment transactions. Even the simple recognition of cryptocurrency and blockchain technology by exchanges like ICE is a huge step in the right direction for digital assets, let alone an exchange working on a solution to incorporate the technology.