Bakkt 2: the future (of bitcoin) | Ecency

With apologies for the title, Bakkt – a major new bitcoin infrastructure project that seemingly came out of nowhere in August – has published a second update about what it’s planning to do. TL;DR it’s good stuff for crypto.

Early in August, the same week the SEC gave the bitcoin markets a kick in the guts by postponing their decision on the SolidX-VanEck ETF, Bakkt entered the scene with its announcement interview in Fortune magazine. The initiative had been developed under strict secrecy for over a year, for launch in November this year.

At a time of pessimism over crypto and uncertainty about an ETF, Bakkt is an exciting proposition. Backed by Microsoft and Starbucks (for their experience with digital payments, not for a way to buy coffee with bitcoin), the intention is to drive bitcoin adoption in both the financial sector and, ultimately, in retail.

As the Fortune article explains: ‘This morning Intercontinental Exchange—the trading colossus that owns the New York Stock Exchange and other global marketplaces—announced that it is forming a new company called Bakkt. The new venture, which is expected to launch in November, will offer a federally regulated market for Bitcoin. With the creation of Bakkt, ICE aims to transform Bitcoin into a trusted global currency with broad usage.’

Bakkt have gone about their business the right way, quietly building the tech and infrastructure and only announcing it shortly before launch, rather than looking to market vapour. Their updates have not been frequent or numerous. This article is only the second from the project itself, and consequently it’s worth a read. (You can read the first, which is about price discovery, here.)

As both the first and second article are at pains to state, physical delivery is a critical part of what Bakkt are doing. This is a vital element of price discovery and creating a more stable, liquid and active market for bitcoin. As a first step, Bakkt are offering bitcoin futures, combining existing financial market infrastructure and regulation with the tech to store bitcoin safely. Among other things, that means they’re not offering leverage. ‘Futures’ in this instance isn’t a paper contract, the kind of Monopoly money that’s shuffled around between traders in vast quantities every day. This is not like precious metals – the futures market for which exceeds the actual quantity of gold and silver many, many times over. Buy a Bakkt bitcoin future and it involves purchasing an actual bitcoin: that demand is passed through to the market.

Bakkt’s aim at this point is to serve institutional finance by providing them with the infrastructure they need to buy and sell bitcoin within the necessary regulatory framework. We know that’s something for which financial organisations have been crying out, as they see a new and exciting asset class get away from them.

We’ll know more in just a few weeks, but this is a great development for crypto. So, while the ETF would be nice, what Bakkt are doing makes it a little less important.