Tuesday, August 16, 2022

Bakkt launch finalized. Will Bitcoin finally gain the trust of institutional investors?

The Takeaway:

The intercontinental exchange (ICE) is all set to become the parent company for Bakkt, an open platform for all digital currency-related services, involving trading and warehousing. After being dawdled for numerous times, the ICE has announced its launch on September 23, 2019. The platform is established to allows customers and institutions to buy, sell smoothly, store, and spend the cryptocurrencies. The initiation of Bakkt is an effort to enhance the trust along with the infrastructure and liquidity of crypto markets. It is an efficient, uniform, and secure website which will be accessible globally.

Cryptocurrencies or the digital cash, traded on exchange platforms are a massive part of the internet and financial sector. It’s no mystery that cryptocurrencies have created a whole separate world with unimagined people believing and investing in them. But to no surprise, a vast majority of the world population exist who don’t trust the crypto world and resist to connect with any of its activities.

The crypto critics are quite quick to dismiss the virtual currencies, but there are valid reasons for their concern.

The foremost factor why cynics don’t confide in cryptocurrencies is because more than a handful of people don’t know how the crypto world works. This is what distinguishes the investors from the skeptics.

Crypto volatility – One of the primary cause is the unpredictability of the coins’ value. Explicitly, crypto has no real value attached to it. It doesn’t hold any intrinsic value, and the rates differ based on several reasons like its mining, the market, the supply, and more. Some people consider that bitcoin will one day replace gold in terms of value. On the other hand, a good amount of public assumes it to be ultimately worth nothing.

However, if we dive deep, the fiat currency value depends on the same factors like supply, demand, etc. What separates them from the digital money is the quality of being abstract or physical.

Decentralized system – The governments do not oversee the digital currencies. The feature of not being backed by the authorities is undoubtedly a defining reason why people do not trust the cryptocurrencies. While interesting to few, the lack of regulation adds up to people preferring a distance from the crypto world.

To bring transparency and trust to digital assets, the future of cryptocurrency infrastructure is all set to enter the crypto world. The Intercontinental Exchange (ICE) is entirely prepared to launch Bakkt, a virtual currency futures trading, and custody platform, to offer a federatively regulated crypto market.

What is ICE?

ICE, an American company is the owner of the New York Stock Exchange, the world’s largest exchange, and several monetary markets. Founded by Jeffrey C. Sprecher in 2000, the firm operates 12 regulated exchange platforms and six central clearinghouses. ICE provides improved price clarity, efficiency, increased liquidity, and decreased trading costs.

With the initiation of bringing Bakkt, the exchange has now stepped a foot in the crypto-asset markets.

Bakkt – A crypto revolution

Bakkt, a cryptocurrency startup by the ICE is a leading path to drive the digital cash into the mainstream. Pronounced as ‘backed,’ the platform refers to the asset-backed securities. It is a globally accessible, open, and seamless platform to trade internet coins. Supported by firms like Microsoft cloud and Starbucks, Bakkt aims to present the users with the capability of using bitcoin as a source of payment for goods and services and use cryptocurrencies in everyday life. The users can join the crypto coin trading through the bitcoin futures contracts.

Bakkt is ready to inaugurate open technology to unite with the present market and merchant infrastructure to the blockchain. Also, the startup will include a direct user interface to commence a ‘simple, safe, and efficient’ trading of virtual money.

Bakkt founders

The building of Bakkt is more human than technological. Adam White, the chief operating officer (COO) of Bakkt, left Coinbase to join the new digital asset platform. Kelly Loeffler, after serving as the Chief Communication and Marketing Officer in the ICE for 16 years, is now the CEO of Bakkt. Kelly is married to the ICE’s CEO and founder Jeffrey Sprecher.


Bakkt’s investment partners famously include Microsoft, Starbucks, and Boston Consulting Group (BCG) besides a series of Wall Street firms like the Eagle Seven, Galaxy Digital, and more.

Microsoft founder, Bill Gates had recently expressed his concern over the ill-acts accompanying the digital currencies like bitcoin. As stated by Gates, the cryptocurrencies are killing people in a “fairly direct way,” being used as payments for drugs and terrorist fundings. In 2014, the Microsoft genius was, however, a crypto enthusiast who defined the crypto coins as “better than currency.”

Does this investment mean that he has changed his mind? Or maybe, he is just warming up to the idea!

On the other hand, after rejecting the idea at first, Starbucks has now jumped on the crypto ship. The coffee giant is all geared up to accept Bitcoin-based payments. However, this does not indicate the use of bitcoins as a local currency. You won’t be able to buy a Matcha Lemonade with bitcoin directly; instead, the exchange will allow digital cash conversions into US dollars.

“It’s very big news for bitcoin because people say where can you spend it? Now at every single Starbucks,” says Brian Kelly, founder, and CEO of BKCM.

Bakkt’s delay

The launch of Bakkt was announced on April 3, 2018, by the ICE. Initially declaring the launch date as December 12, the release of Bakkt was delayed in November to ensure “warm wallet insurance” for Bakkt’s infrastructure. Moving forward to 2019, ICE decided to push Bakkt’s introduction again for late this year. The push came with the delay on attaining approval from the Commodity Futures Trading Commission (CFTC) due to differences in the regulation of the platform.

Bakkt organized several events in New York and Chicago and sat down with CFTC and SEC management. The SEC had rejected 9 Bitcoin ETFs based on the futures market due to lack of liquidity in the market. The lack of infrastructure in markets is one of the active reasons that make institutional investors slow in investing. Second is the lack of liquidity. Besides, price formation and the absence of a custody provider for cryptocurrency delivery were cited to be the concerns of the SEC. Though the custody providers exist, the participation of well-known institutions is also essential.

Main Characteristics serving Bakkt

Bakkt is on its road to establish a new standard for institutional crypto markets. The platform will meet the most eminent compliance, surveillance, and regulatory standards for the crypto markets.

Bakkt Warehouse, the digital currency storage will stock the customers’ bitcoins. It is both an offline (cold) and an online (warm) storehouse. Further, Bakkt’s warm and cold wallets are insured by a sum of $125,000,000 policy from a preeminent worldwide syndicate. The wallet keys will be verified and secured by the Hardware security modules (HSM). Comprehensive cybersecurity will be programmed by two-factor authentication (2FA) and yearly operational and security inspections. The IP address and withdrawal address whitelisting will add to the safety program.

All Bakkt operations will commence with need-to-know access and supplement layers to protectivity. The trading platform is designed for institutional market associates. AML or KYC policies, of bank-level, paired with blockchain monitoring, will assist the exchanges.

To overcome all the insecurities and complications in the crypto investment sector, Bakkt offers best-in-class market uprightness and asset safeguarding. Besides, the rare feature of bitcoin to fiat currency conversion will be rendered on the website. The main characteristic also includes the debut of physical BTC futures contracts.

Sprecher declared the independent existence of Bakkt from ICE, as it has its own offices, management team, and infrastructure.

What does Bakkt imply for bitcoin?

To a grand assumption and expectation, Bakkt is on a win to be the gamechanger in the cryptocurrency investment world. The settlement of bitcoin futures on the exchange is almost implemented, and hopefully, the delivery of bitcoins from the Bakkt Digital Asset Warehouse will be initiated at the extreme of the contract term.

Although Bakkt delayed indefinitely, it is all prepped up to come into execution from September 23. It may eventually commit to being a blue-chip, but Will crypto be howling success with Bakkt? We can just wait and expect!

Disclaimer: The article reflects the opinions of the author and is not representative of Chaintimes’ views.
The article does not offer any investment advice. User discretion is advised when investing in or trading with cryptocurrency. Extensive and diligent research should be carried out by the reader before making a decision.

Thomas Allums
Thomas Allums
Although Thomas is an experienced writer, he is also a passionate musician who loves to travel often. He is based in New York and loves to spread the word about decentralization throughout his neighborhood.

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