A glimpse into the peculiarities of the Bakkt platform and why this solution can be revolutionary for the entire crypto world.
2018 has been a sluggish year for the crypto currency sector, but with Bakkt on the horizon, that could change. A startup launched by the Intercontinental Exchange (ICE). Many believe that Bakkt could be transformative and trigger a crypto-evolution.
Supported by heavyweights such as Microsoft and Starbucks, Bakkt is expected to begin testing and onboarding in November, and trading and storage in December, subject to CFTC approval, said Bakkt CEO Kelly Loeffler.
Personally, I believe that this launch will be huge for the digital currency space and could actually be the biggest Bitcoin catalyst since the 2008 financial crisis. Here are some reasons for it.
Bakkt could finally reach the mainstream
In the wake of the 2008 financial crisis, one thing became clear: the status quo for handling financial transactions was no longer acceptable. It was exactly the right time for Satoshi Nakamoto’s whitepaper “Bitcoin: A Peer-to-Peer Electronic Cash System” with its vision of a “pure peer-to-peer” version of Electronic Cash that would allow online payments directly from to send one party to another without going through a financial institution “to make such a dramatic impact.
Ten years later, the spirit of this initial vision is still alive today. However, there are also some differences. In particular, in 2018 there is the non-negotiable need for the crypto sector to work with regulators to produce legal products – Bakkt is well aware of this.
“Bakkt will use resources from well-known companies with knowledge of risk management and technology to create a nationwide regulated platform. As investors feel comfortable in a regulated environment, volatility should decrease”
said Christopher Bates, a former member of the NYSE.
In fact, I believe that Bakkt, described as a “scalable driveway for institutional, traders and consumers by fostering greater efficiency, safety and value”. This is precisely the kind of offer that will reassure regulators and foster an inflow of institutional interest into the crypto space.
Bakkt clears the way for ETF
On September 25, Bakkt launched its first product: a physical Bitcoin futures contract. These differ from existing Bitcoin futures contracts in that “as part of the settlement process of ICE-led Bitcoin futures, bitcoins are actually delivered at a particular time, unlike other Bitcoin futures today, which are settled in cash” ,
In addition, Bakkt’s latest product addresses some of the shortcomings that contributed to the rejection of many Bitcoin ETF applications earlier this year, notably the lack of trusted pricing and the dependence on derivatives markets and derivatives.
“With our solution, the purchase and sale of Bitcoin are fully secured and pre-funded. As a result, our new daily Bitcoin contract will not trade in margin, leverage, or serve to raise a paper asset in kind. This supports market integrity and differentiates our efforts from existing futures and crypto exchanges that allow for margins, leverage and cash settlement.”
Loeffler said recently.
I even believe that Bakkt’s physical Bitcoin futures contract will be a tremendous success in this area. This is the company’s first attempt to offer a legal solution to the crypto market.
Bakkt solves all security concerns
Many crypto-currency companies have recognized the importance of increased security for their customers, especially in the wake of major ICO fraud and crypto-frauds.
In particular, crypto-custodianship has become an important initiative for many companies. “According to some estimates, $ 10 billion of institutional money is on the sidelines to invest in digital currency today,” said Coinbase CEO Brian Armstrong in a blog post last year.
What stops her? “The existence of a Digital Asset Custodian whom they can trust to keep client funds safe,” Armstrong continued before introducing Coinbase Custody.
Bakkt will also provide a qualified cryptocurrency depository, allowing various institutional investors to invest in the crypto asset class.
In addition, the company’s security solutions include the monitoring of crypto currency fraud and ultimately pave the way for mainstream adoption by meeting both institutional and regulatory requirements.
Bakkt solves bitcoin scalability for businesses
In addition to concerns about security, Bitcoin’s scalability concerns have prevented the introduction of mainstream – after all, Bitcoin’s current capacity is about seven transactions per second, which is far too slow for enterprise-level operation.
However, Bakkt is ready to address this issue through the use of a primary off-blockchain solution. The startup would be to the ICE Futures U.S. Exchange connected so that customers Bitcoin can trade seamlessly against dollars or euros.
Then, the Bitcoin is transferred from the vendor’s locker in the ICE warehouse to the buyer’s locker, and transactions need only be reported to the blockchain when payments go into or leave the Bakkt warehouse.
With this structure, Bakkt enables its system to work at warp speed and meet enterprise-level requirements.
For all these reasons, along with many other industry experts, I believe that the launch of Bakkt in January 2019 will make a dramatic leap into the crypto market. With all the resources it needs to acquire and maintain institutional acceptance, I believe it is ultimately the largest bitcoin catalyst since 2008.
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Virtual currency is in many countries not legal tender, or is not backed by the government, and accounts and value balances are not subject to consumer protections. The information does not constitute investment advice or an offer to invest.
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