Bakkt, derived from the word “backed”, is a startup company which aim is to provide professional and institutional investors with a cryptocurrency exchange. The difference between Bakkt and an ETF is that Bakkt is similar to a regular cryptocurrency exchange, but where the exchange also works as the middle-man.
The Bakkt exchange will offer 1-day futures, physically backed by Bitcoin which will be delivered the next day to the contract buyer. Bakkts trading is fully collateralized, which means that their contract won’t be able to be traded on margin, leverage or otherwise. This, Kelly Loeffler, CEO of Bakkt says, will differentiate Bakkt from other exchanges and futures. Additionally, it will also improve market integrity and allow for more accurate price discovery.
Since Bakkt is being launched by Intercontinental Exchange (ICE), who also owns the New York Stock Exchange, it will have over $85 billion in assets. This means it is a very secure counterparty compare to other exchanges. ICE itself also has many relationships with banks and brokers which will allow for institutional investors to be able to access cryptocurrencies in an easier way.
Many of their primary clients are also big institutions and companies. Companies such as Microsoft and Starbucks have been actively involved in the Bakkt project. Starbucks specifically is looking to accept payments for customers that use Bakkt, something that we have previously covered here at Toshi Times.
But not only will Bakkt enable institutional investors to buy Bitcoin in a safe, transparent and regulated environment – regular investors will now also be able to invest their 401k and IRA into Bakkt if they want.
While much attention is being given to the approval of the Bitcoin ETF, many are missing out on the progress being done by Bakkt. If the offering is approved by the CFTC, the platform is set to launch in November 2018.
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Bought my first Bitcoin in 2013, but when Ethereum was released in 2015 I decided to make cryptocurrency my biggest focus in life since I realized what impact smart contracts will have on society. It has since then been my biggest passion in life and it usually takes up most of my waking hours. I like to program and have followed and interacted with what happens in blockchain pretty much constantly during this time, and spent countless hours researching this amazing technology. I believe this is why I have a good technical understanding of all the different blockchains and its concepts, which is something I try to do my best to spread while working at Toshi Times.