Bakkt One Step Closer to the Masses
Major financial institutions' advancements with bitcoin lead for a giant step towards mass adoption for bitcoin.
Only recently has the major financial institution, Intercontinental Exchange (ICE), announced that its much anticipated Bakkt futures contracts have been given the green light from New Your State Department of Financial Services. They have launched their product on the 23rd of September.
What is Bakkt?
Bakkt is a payment system and futures trading platform, created by Intercontinental Exchange (ICE). ICE is also the parent company of the New York Stock Exchange and several other regulated exchanges in the United States. With such a strong infrastructure surrounding Bakkt, it is expected to play a massive role in the mass adoption of cryptocurrency throughout society.
What we know about Bakkt so far.
Bakkt futures contracts will be issued in two forms. They will be issuing daily and monthly contracts with the monthly contract enabling its recipient to hold it for up to 12 months, for a longer-term view on bitcoins price.
As with most futures contracts, leverage will be something that is incorporated into Bakkt contracts, however very little has been announced so far in terms of the amount of leverage that will be accessible to Bakkt customers. Information surrounding leverage will be expected to be announced in the upcoming weeks as further information is supplied.
How safe is Bakkt?
Bakkt had an unfortunate start in its life being the victim of a devious scam back in February 2019 when an unidentified individual began sending emails into Bakkt investors. The emails instructed their recipients to register their details and send funds to a bitcoin address provided in a separate email. Representatives from ICE confirmed that the website was fake and the person who sent the emails was not affiliated with ICE or Bakkt. Although the damage and victims involved were very minimal. Bakkt has ensured to create transparency and a high level of security in how it operates.
Kelly Loeffler, the CEO of Bakkt wrote this in a recent article promoting Bakkt contracts:
“We’re starting with the introduction of a regulated and secure qualified custodian for bitcoin to support our futures contracts. The Bakkt Warehouse, which is part of Bakkt Trust Company, is built using the cyber and physical security protections that support the world’s most actively traded markets, including the NYSE.”
Again, with Bakkt being a subsidiary of ICE, having the support of major exchanges such as the NYSE, will certainly play a strong role in its credibility.
How will Bakkt affect the non-investor?
One of the main points of focus for Bakkt, aside from having access to its futures contracts, will be its ability to integrate bitcoin and other major cryptocurrencies to the non-investing community. Its ability to do this will be through its support with other major companies, such as Starbucks, Microsoft. More partnerships expected to be announced in the near future. This will enable these companies to more efficiently accept payments in the form of cryptocurrencies, being processed through the Bakkt payment system. This will be the next milestone in further adoption throughout society, as more people gain awareness and own bitcoin or other cryptocurrencies.
How will Bakkt affect the price of bitcoin?
Throughout Bitcoin's history, news has played a vital role in its price contribution. We are expecting the launch of Bakkt and its coverage to play a vital role in the price increase of Bitcoin. Once Bakkt goes live and new investors are introduced into the market, this will expectedly cause the increase of Bitcoin to further highs, although the initial release of bitcoin futures back in December 2017 was not long followed, less than a week, by a massive spike in price to all-time highs shortly followed by a parabolic decrease.
Hopefully, with the additional volume from institutions using Bakkt, this will cause the volatility of Bitcoin to smooth out, minimizing the likelihood of any sudden drop in Bitcoins price.
Final Summary
If Bakkt do indeed to go on to lead the market for bitcoin futures contracts and bring in high levels of volume from institutional investors, this will no doubt cause some level of discrepancy from cryptocurrency enthusiasts, believing that cryptocurrencies main purpose of decentralization is being hampered, due to their control in the market and ability to manipulate it.
Others believe that Bakkt is a necessary step to introduce Bitcoin to the mass market and without a major leap in this direction; Bitcoin will remain to be an underground currency in its minority not getting the attention from the general public that it requires in order to provide a real service for use as a currency for all to use.
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Author: Lewis Irving
lewis@cryptowedge.com
