Is Bakkt Deliverable or The Hotel California?
Can You Check-In But Can’t Check out?
When Bakkt first went live I was unimpressed. As an experienced trader who has made and taken delivery of gold and silver on Comex and made delivery on Live Feeder Cattle of CME, I could find no delivery mechanism on the so-called Bakkt Deliverable Futures contract.
Further suspicion arose when they created an independent warehouse for delivery tied to the Bakkt Exchange rather than use existing approved feedlots (live cattle) or vaults (gold and silver) independent of the exchange.
But that got me to thinking. . . well, perhaps this is a synthesis between traditional commodity contracts and securities. Perhaps the Bitcoin is held like a stock certificate and will be delivered upon request.
After all, Bitcoin does seem to be a new asset. A digital commodity used as decentralized money.
So I began to dig deeper. The contract specifications got me excited. Those specifications can be found here. (Note Medium does not currently have a feature to load attachments. Hopefully, this feature will be added soon.)
Regulated infrastructure for bitcoin markets and custody
Bakkt, ICE Futures U.S. and ICE Clear US are bringing federally regulated price discovery to bitcoin markets. Fueled by…
The pdf files are in this section.
Now after I read these specifications I started to get excited. Really excited! If this was truly a deliverable Bitcoin futures contract it would extremely bullish because a regulated trusted gateway would now be open. So next I started to look for how long it would take for me to actually deliver Bitcoin and have it converted into a Bakkt certificate. And conversely how long it would take me to convert a Bakkt certificate into Bitcoin and have it send to my private key.
Unlike all other deliverable commodity contracts, this information was not published. I am simply provided with an email address to contact the Bakkt warehouse for more information.
Further, I have not been able to locate a Futures Commission Merchant (FCM) knowledgable about Bitcoin and the Bakkt delivery procedure. As in gold, silver, and live cattle, the FCM stands between the client and the exchange. So it is quite possible the procedure is not yet worked out.
In checking other posts Bakkt is very vague.
Bitcoin Futures & Custody: Bakkt’s differentiated approach
User acceptance testing for bitcoin futures custody and trading planned for July
Now, these are old posts. But with the public information available, the Bakkt deliverable contract may not be a deliverable contract at all.
First, Bitcoin is the standard for secure digital assets. It is only your bitcoin if you have possession of the private key. We don’t want or need a “new standard.” Bitcoin Is The Standard. We simply want an open gateway where we can take possession of Bitcoin and make delivery of Bitcoin.
Second, WTF is a differentiated approach? Does this mean we give up our secure Bitcoin to another trusted third party as we do on all other exchanges?
I am leery about carrying this discussion further until the details of the on-ramp and off-ramp are published. However, without more information, Bakkt certificates appear to be no more than a centralized attempted takeover of Bitcoin which is obviously failing. A Hotel California where you can check out anytime you like, but you can never leave. A Bakkt Bitcoin as you will, in the same vein as Bitcoin Cash, Bitcoin Gold, or Bitcoin Private but from which there is no escape. Perhaps a better description is that Bitcoin Bakkt is like a Bitcoin Tether.
By the same token over $182 million has been spent to develop the platform. Can the platform be salvaged? Has it been led by complete incompetents? Or is there another shoe ready to drop? What are we not yet being told? They claim to be transparent, but what is really going on here?
Bakkt Bringing Trust and Utility to Digital Assets
Whether between consumers and merchants or peers, the ability to conduct transactions in digital assets holds promise…
The solution is not difficult. The Bakkt warehouse is a fine innovation. Many Bitcoin Standard Bearers are willing to put a portion of their hodl into Bakkt certificates if we knew how long it takes to accomplish the task. 72 hours following 6 confirmations seem sufficient and reasonable for the on-ramp. The same 72 hours after delivery notification for the off-ramp delivery to a private key. This is in line with all other conventional deliverable futures contracts.
Bitcoin would have a regulated and secure exchange. And the amount of bitcoin held on the Bakkt exchange in the form of warehoused Bakkt certificates will be regulated by its users. Such a move will not just make Bakkt the premier bitcoin market maker, but it is tremendously bullish for the Bitcoin Standard and unfathomable innovations emerging in the future.
UGLY OLD GOAT
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