What is Bakkt?

What is Bakkt and Bakkt for Bitcoin?

OnAugust 3rd, 2018, the owner of the New York Stock Exchange and other global marketplaces, Intercontinental Exchange (NYSE: ICE) launched a new company known as Bakkt (pronounced “backed”). ICS is a leading operator of global exchanges, clearing houses, data and listings services.

Bakkt is formed to offer a federally regulated Bitcoin market or digital assets and turn bitcoin into globally trusted currency. Bitcoin is considered to be the most liquid digital/cryptocurrency. Bakkt is developing an open technology to connect the existing market and merchant infrastructure to the blockchain and planning to leverage Microsoft cloud solutions to create an open and regulated, global ecosystem for digital assets.

The ICE's Bakkt has teamed up with BCG (Boston Consulting Group), Microsoft, Starbucks, and others. They will create an integrated platform allowing consumers and institutions to buy, sell, store and spend digital assets on a seamless global network. Other investors in Bakkt include Fortress Investment Group, Eagle Seven, Galaxy Digital, Horizons Ventures, Pantera Capital, Protocol Ventures, Susquehanna International Group, LLP, as well as British billionaire and hedge fund manager Alan Howard.

Snip from https://www.bakkt.com

The Bakkt ecosystem is expected to include federally regulated markets and warehousing along with merchant and consumer applications.

The Bitcoin Futures Product

Its first use case targets USD $270 billion digital asset marketplace which will allow for trading and conversion of Bitcoin versus fiat currencies.

ICE Futures U.S. and ICE Clear U.S. will launch its first physically delivered Bakkt Bitcoin (USD) Daily Futures Contract for bitcoin held in Bakkt Warehouse. This will enable access for institutional investors via regulated market infrastructure.

Each futures contract calls for delivery of one bitcoin held in Bakkt Warehouse. It will trade in U.S. dollar terms. For the trading purpose, there will be only one daily contract listed for each Business Day.

Bitcoin futures allow investors to bet on the price of the cryptocurrency. Other bitcoin-futures contracts exist but they pay out in dollars.

The world’s largest exchange company, CME Group Inc. and the operator of the biggest U.S. options exchange, Cboe Global Markets Inc., launched futures on the cryptocurrency in December. However, contracts from these settle in fiat currency, US dollars, rather than bitcoin when the futures contract ends.

Applications for digital currencies continue to develop alongside regulatory frameworks and rising investment in blockchain technology which, halfway through 2018, has already exceeded all of 2017, according to KPMG.

In the recent announcement, CEO of Bakkt, Kelly Loeffler, stated that Bakkt is targeting its contract launch on January 24, 2019, for trading.

Back in August 2018, in an official announcement, CEO of Bakkt, Kelly Loeffler, said, “Bakkt is designed to serve as a scalable on-ramp for institutional, merchant and consumer participation in digital assets by promoting greater efficiency, security, and utility. We are collaborating to build an open platform that helps unlock the transformative potential of digital assets across global markets and commerce.”

By leveraging trusted market infrastructure, Bakkt is being engineered to help the digital asset markets evolve securely and efficiently while supporting transaction flows. From ICE's standpoint, Bakkt is not the first entry into digital asset market as they have already invested in well know crypto-wallet service, coinbase.

How Bakkt futures product will affect bitcoin and its valuation is remain to be seen in 2019. Also as far as regulations considered, most of the government regulation demand a central authority and control over the underlying assets. Both of these philosophies are against the bitcoin. Futures product from Bakkt reads like bringing kind of centralization to Bitcoin when its supply and pricing are considered. Having said that, investors and businesses around the world are trying to reap profits out of the new class of digital asset by bringing new financial products into the market and building trust into digital assets/bitcoins.