Four Reasons Why Bakkt May Be the Biggest Bitcoin Catalyst Since 2008

Chris Kline, expert crypto enthusiast and COO of Bitcoin IRA, shares his insights into the nature of Bakkt platform explaining why this solution may be revolutionary for the whole cryptocurrency world.

Update: the Bakkt digital assets platform delayed Bitcoin futures launch and now targeting Jan. 24, 2019 as a launch date.

2018 has been a sluggish year for the cryptocurrency sector so far, but with Bakkt on the horizon, that may be about to change. A cryptocurrency startup launched by the Intercontinental Exchange (ICE), many believe Bakkt could be transformative and ignite a cryptocurrency revolution.

Backed by such corporate heavyweights as Microsoft and Starbucks, Bakkt is scheduledto begin testing and onboarding in November and trading and warehousing in December subject to CFTC approval, according to Bakkt CEO Kelly Loeffler. I, personally, believe this launch will be tremendous for the digital currency space, and could, in fact, be the biggest Bitcoin catalyst since the financial crisis in 2008. Here are four reasons why.

Bakkt Could Be the Driving Force Behind Mainstream Adoption

In the wake of the financial crisis in 2008, one thing became abundantly clear: the status quo for processing financial transactions was no longer acceptable. It was precisely the right time for Satoshi Nakamoto’s whitepaper “Bitcoin: A Peer-to-Peer Electronic Cash System,” with its vision for a “purely peer-to-peer version of electronic cash [that] would allow online payments to be sent directly from one party to another without going through a financial institution,” to make such a dramatic impact.

Fast forward ten years. While the spirit of that initial abstract is alive and well today, there are also some differences. Particularly, in 2018, there is the non-negotiable need for the crypto sector to work alongside regulators in order to create lawful products — and Bakkt is very aware.

“Bakkt will draw resources from reputable companies with knowledge in fields of risk management and technology to create a federally regulated platform. Once investors feel at ease trading in a regulated environment volatility should ease,” said Christopher Bates, a former Member of the NYSE.

Indeed, I believe that Bakkt, which is described as a “scalable on-ramp for institutional, merchant, and consumer participation in digital assets by promoting greater efficiency, security, and utility,” is precisely the kind of offering that will appease regulators and drive an influx of institutional interest to the crypto space.

Physical Bitcoin Futures Contracts Add Further Legitimacy

On September 25, Bakkt launched its first producta physical Bitcoin futures contract. These differ from existing Bitcoin futures contracts because “as part of the settlement process of ICE-operated Bitcoin futures, the Bitcoins will actually be delivered on a certain date, unlike other present-day Bitcoin futures that are cash-settled.”

Furthermore, Bakkt’s newest product addresses some of the shortcomings that contributed to the rejection of many Bitcoin ETF applications earlier this year, particularly the lack of trusted price formation and reliance on futures markets and derivatives.

“With our solution, the buying and selling of Bitcoin are fully collateralized and pre-funded. As such, our new daily Bitcoin contract will not be traded on margin, use leverage, or serve to create a paper claim on a real asset. This supports market integrity and differentiates our effort from existing futures and crypto exchanges which allow for margin, leverage, and cash settlement,” Loeffler recently said.

Indeed, I believe Bakkt’s physical Bitcoin futures contract, the company’s first concerted effort to provide a lawful solution in the crypto market, will be a tremendous success in the space.

Bakkt Offers the Heightened Security Customers Need

Many cryptocurrency companies have recognized the importance of providing heightened security measures for their customers, particularly in the wake of major ICO scams and crypto scams.

In particular, the issue of crypto custodianship has become a major initiative for many companies. “By some estimates, there are $10B of institutional money waiting on the sidelines to invest in digital currency today,” CEO of Coinbase Brian Armstrong said last year in a blog post. What’s stopping them? “The existence of a digital asset custodian that they can trust to store client funds securely,” Armstrong continued, before introducing Coinbase Custody.

Bakkt, too, will provide a qualified custodian for cryptocurrencies, thereby enabling various institutional investors to make investments in the crypto asset class. In addition, the company’s security solutions include the monitoring of cryptocurrency fraud, ultimately paving the way for mainstream adoption by catering to both institutional and regulatory needs.

Scalability Suited for Institutional Adoption

In addition to concerns surrounding security, concerns about Bitcoin’s scalability have also prevented mainstream adoption— after all, Bitcoin’s current capacity is about seven transactions a second, which is far too slow to operate at an enterprise level.

However, Bakkt is prepared to tackle this issue by utilizing a primarily off-blockchain solution. The startup would be connected to the ICE Futures U.S. Exchange, so customers can seamlessly trade Bitcoin for dollars or Euros. Then the Bitcoin will shift from the seller’s lockbox in the ICE warehouse to the buyer’s lockbox, and transactions would only need to be reported to the blockchain if there were payments coming into or exiting Bakkt’s warehouse.

With this structure, Bakkt is “enabling its system to operate at warp speed,” and able to keep up with demands at the enterprise level.

For all of these reasons, I, along with many other industry experts, believe Bakkt’s launch in early November will make a dramatic splash in the crypto market. With all of the resources it needs to acquire and maintain institutional adoption, I believe it is ultimately the biggest Bitcoin catalyst since 2008.


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Author: Chris Kline
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ICE announces no Bitcoin Futures this year – could this mean no Santa Claus rally?

The New York Stock Exchange (NYSE) will not be listing the new Bakkt Bitcoin Futures this year. Instead, the launch has been postponed until at earliest late January next year.

According to an announcement from NYSE owner Intercontinental Exchange (ICE), the product – dubbed Bakkt Bitcoin (USD) Daily Futures Contract – is now expected to be listed for trading on 24th of January 2019, rather than the initial date of 12th of December next month:

“ICE Futures U.S., Inc. will list the new Bakkt Bitcoin (USD) Daily Futures Contract for trading on trade date Thursday, January 24, 2019, subject to regulatory approval. The new listing timeframe will provide additional time for customer and clearing member onboarding prior to the start of trading and warehousing of the new contract.”

The Bakkt product is designed to provide investors with the opportunity to trade a physically-settled cryptocurrency contract or futures product on a regulated exchange. As ICE explains in detail:

“ICE Futures U.S. offers physically delivered daily futures contracts on Bitcoin traded in BTC/USD (subject to regulatory approval). These contracts will be traded on ICE’s electronic trading platform, which offers industry-leading speed and reliability, regulated by the CFTC. All trades are cleared and guaranteed by ICE Clearing US, the central counterparty for all ICE cleared forex futures trades. Trades will result in physically delivered Bitcoin in the regulated Bakkt Warehouse. Market participants are eligible to transact with any other market participants. ICE physically delivered bitcoin futures offer trading and hedging opportunities.”

The launch of the product is hoping to send prices of the market upwards and analysts have been predicting that the launch of the product in December could helped see to a “Santa Claus” rally. With this delay, however, Christmas might have to come a little later than anticipated.

Although a delay might be a bad thing in the short-term, it might be beneficial in the long-term and could ultimately cultivate a healthy, sustainable crypto-ecosystem.


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Author: Rebecca Leighton
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Starbucks and ICE’s Bakkt partnership: Does it mean anything for cryptocurrency space?

New York Stock Exchange parent, Fortune 500 and Fortune Future 50 company Intercontinental Exchange (ICE) announced in August its plans to create a new firm, Bakkt, which intended to utilize Microsoft Cloud solutions to create an open and regulated worldwide ecosystem for digital assets.

The new firm is collaborating with such organizations as Microsoft, BCG, Starbucks and others to develop an integrated platform that allows for institutions and consumers to purchase, sell, store and spend digital assets on a seamless worldwide network.

Federally regulated markets and warehousing along with consumer and merchant apps are expected to make up the Bakkt ecosystem. The first use cases of the ecosystem will be for trading and conversion of bitcoin versus fiat currencies.

Does Starbucks’ involvement in this project mean anything for the digital currency sector? I asked Sheri Kaiserman, 20+ year Wall Street veteran and principal advisor & co-founder at Maco.la, and Jason Davis, former senior UX designer at Wells Fargo and CEO of Hoard, a platform that allows for seamless integration and management of both crypto and fiat currencies. (Thanks to Lauren Epstein and account supervisor Stephanie Rosenblum at PR agency 5W for coordinating).

Starbucks and ICE’s Bakkt partnership: Does it mean anything for cryptocurrency space?

Sheri Kaiserman

Kaiserman: “I think it is premature if everyone is thinking that people will start using their crypto to make purchases at Starbucks.  First of all, from what I understand, Starbucks’s role in this partnership is more as a consultant to help develop crypto related applications for customers.

Second of all, even if Starbucks did accept crypto as payment, I would not expect many people to pay with it, certainly not in the US, where most of the people who own crypto hold it for speculative purposes.

There are a lot of expensive lessons the community is able to learn from the people who spent their bitcoin in the early days.  The first purchase that was made with Bitcoin was for 2 pizzas costing 10,000 bitcoin. I’d be happy to buy someone a cup of coffee for just one tenth of a bitcoin!”

Starbucks and ICE’s Bakkt partnership: Does it mean anything for cryptocurrency space?

Jason Davis

Davis: “The press release issued by Starbucks pertaining to customer purchases using cryptocurrency is nothing more than hype. Starbucks customers are already spending their bitcoin, as well as many other cryptocurrencies, at Starbucks retail locations using crypto-backed Visa debit cards. In fact, digital currency holders are making similar purchases all over the world and have been for years. The most exciting thing we can gleam from the press releases is Starbucks is talking about Bitcoin to the general public. This is a positive direction for the retail sector.

However, what this announcement didn’t emphasize is the corner merchants are still backed into. With every consumer purchase, merchants are beholden to 3 percent transaction fees AND 3 to 5 day settlement times. Cryptocurrencies, and companies like Hoard that support crypto-commerce see a different future. One where merchants aren’t subject to a single medium of exchange backed by a slow and centralized intermediary. Instead, they can transact directly with the counterparty and settle the transaction in seconds without paying exorbitant fees.

Lastly, the partnership with Bakkt and Bakkt’s capabilities are still to be seen. Cryptocurrency companies make many claims yet very few are viable at this time. From what we know, buying Bitcoin through Bakkt consists of a futures contracts. Until that futures contract is converted into real asset ownership, consumers won’t be in full possession of their bitcoin. This is in direct opposition of the original position of the Bitcoin white paper, an electronic peer-to-peer cash system. I’m interested to see how this plays out but I know first-hand far more robust and integrative financial solutions are coming to retail consumers. This deal isn’t it.”

Image credits:

Starbucks headquarters – Public domain image by Wesley2048 at the wikipedia project

Photos of Davis and Kaiserman – Via 5W


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Author: Tabish Faraz
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Cryptocurrencies Will Replace Fiat By 2030, International Blockchain Speaker Claims

  • Nicholas Merten, the founder of the largest crypto Youtube channel (DataDash), thinks cryptos will replace fiat money during 2020-2030.
  • Merten has said that blockchain technology and cryptocurrencies will “reshape the way we think about trust and money.”

Nicholas Merten, the founder of DataDash, the largest cryptocurrency YouTube channel with over 316,000 subscribers, recently noted that crypto will have “four major cycles” including the “Silk Road phase” from 2011-2013, the “retail speculation” phase from 2016-2017, the “institutional speculation” phase from 2019-2020, and finally the “crypto replaces fiat” phase from 2020-2030.

According to Merten, blockchain technology and cryptocurrencies will “reshape the way we think about trust and money.”

If Criminals Use It, Then It Must Be Useful

As most crypto enthusiasts would know, the now defunct Silk Road was a large online black market where people had been buying and selling controlled substances (drugs), and other types of illicit goods through the use of the pseudonymous digital currency bitcoin. Many IT analysts argue that if criminals are using your technology, then it must be useful and may also have other more legitimate use cases.

Clearly, cryptocurrencies were able to serve as an effective medium of exchange on Silk Road’s underground market.- as the US Federal Bureau of Investigation (FBI) managed to seize 144,000 bitcoins (BTC) (worth $28.5 million at the time) after cracking down on the illegal network.

Silk Road Indirectly Helps Introduce Crypto To Retail Investors

Most of the cryptocurrency belonged to Dread Pirate Robers, the owner of the Silk Road – allegedly Ross Ulbricht. Although Ulbricht is now serving two life sentences without the possibility of parole at a high security federal prison in Colorado, the large number of successful cryptocurrency transactions carried out on the Silk Road may have caught the attention of retail investors.

As Merten noted, the retail speculation phase of cryptoassets came just a few years after the Silk Road was shut down (in October 2013). With a few ups and downs, crypto prices did steadily increased from 2013 to 2016.

In 2017, digital currency prices hit record highs – which was largely due to large investments made by retail investors in highly speculative blockchain-based digital assets.

Xapo Founder: Unrealistic To Expect That Cryptos Will Replace Fiat

Currently, the market capitalization of the crypto market is of about $200 billion – which is considerably lower than its all-time of high of over $800 billion. However, to put things into perspective, the digital asset market was only valued at around $20 billion in January of 2017 – which means that cryptos have (overall) appreciated in value by 10x in (almost) the past two years.

As Merten pointed out, we are now beginning to see more institutional players enter the crypto space such as Fidelity Investments’ digital asset project, the New York Stock Exchange’s crypto platform (Bakkt), Goldman Sachs’ bitcoin derivatives products, among many others.

However, Merten’s assertion that cryptocurrencies will replace fiat may be quite far-fetched as early bitcoin adopter and founder of Xapo, Wences Casares, pointed out:

bitcoin could change money the way the internet changed information but this idea that a blockchain can be used to change an asset that already derives its value from a central authority like title insurance, or banks, or securities settlement is really non-sensical. It’s not true and it doesn’t make any sense.

Author: Omar Faridi

 

How Bakkt Could Lead Bitcoin To Recovery

A well-known crypto trader, technical analyst and all-around figure the crypto space, Alex Kruger has said that Bakkt will lead the recovery of Bitcoin throughout the end of this year to the start of the next.

Kruger went onto say that denial of the Bitcoin exchange-traded fund filling of SolidX, VanEck and Chicago Board Options Exchange will lead to the crash of Bitcoin, possibly leading back down to the $6,000 mark and maybe even the $4,000 level.

Kruger said:

“Possible outlook for BTC: First, bull run on BAAKT & renewed ETF approval narrative early 2019. Second, ETF denied Feb/27, massive crash, goodbye 6k, hello 4k, cleanse all weak hands Lastly, halvening 2020 narrative and re-adjustments lead to [a] sustained bull run for the rest of 2019 & 2020.”

The trading platform, Bakkt has strict regulations on it by its developer’s ICE, the parent company of the New York Stock Exchange and is currently in the process of established an ecosystem that enables both retail traders and institutional investors to invest in the crypto market with sufficient investor protection and through products which are in touch with the regulations in the United States.

Bakkt is expected to launch a cryptocurrency futures market next month. This aims to increase the liquidity of Bitcoin. Prior to this, the US Securities and Exchange Commission rejected nine Bitcoin ETFs on the premise that the Bitcoin futures market is not a sufficient size to handle an ETF.

As said by CCN:

“The entrance of Bakkt into the cryptocurrency exchange market, the involvement of Bitcoin futures market operator CBOE in the VanEck ETF, and the track record of VanEck in filing over 200 successful ETFs with the SEC have led to an increase in anticipation towards the VanEck-SolidX ETF.”

Throughout the next two to three months, Kruger emphasized that renewed enthusiasm towards the market initiated by Bakkt and the VanEck ETF will lead the Bitcoin price surge up higher to major resistance levels.

Since August, Bitcoin failed to break out in the $6,000 area because of its low daily trading volume and relatively low trading activity in the global crypto exchange market.

As of now, the market needs a major catalyst to engage a proper short-term rally and upside movement leading to the two financial institutions being a major factor which might trigger an increase for the price of Bitcoin.


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Author: Adrian Barkley 
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When the next crypto bull run happens, it’s going to be epic

The current overall market cap for the crypto space is a shadow of what it once was. 2018 has tested the patience and skill of everyone involved. Crypto asset prices are down at least 75% across the board for the most part. But strangely enough, institutions and mainstream entities continue to gain interest and involvement. Logically, all this interest should make the next bull run huge (when the market finally turns around).

Significant Mainstream Interest

The Elusive Bitcoin ETF

The approval of a Bitcoin ETF seems to be the most referenced topic in crypto this year. The Securities and Exchange Commision (SEC) appears to be getting closer to a decision on approving a Bitcoin ETF. The SEC has reviewed numerous Bitcoin ETF proposals this year, with no approvals yet.

A possible decision may come in late December for the Van Eck/SolidX ETF, which appears to have the best chance for success.

A Bitcoin ETF would provide a way for institutional (wealthy) players to enter the market and feel that their funds are safe. The market cap all-time high for the cryptocurrency industry has never surpassed $1 trillion, which is not very high, considering global involvement. The crypto space needs more people and money in order to grow. A Bitcoin ETF is a way to increase people’s involvement in crypto, offering an option with regulatory backing (by the SEC).

Ethereum Futures Coming

Everyone in crypto last year remembers the impact Bitcoin futures made on the market, starting last year’s end of year bull run. Money flooded into the crypto space like never before. Bitcoin futures trading on the Chicago Mercantile Exchange (CME) and Chicago Board Options Exchange (CBOE) showed significant mainstream interest in the crypto space and resulted in the legitimization of cryptocurrency (to a degree).

This year, the CBOE plans to launch Ethereum futures, possibly before the end of the year. This shows that institutional interest is still growing and that Bitcoin futures were not simply a failed experiment. People still want to become more involved in crypto, even after a tough year.

Nasdaq Crypto Exchange Interest

Earlier this year in late April, Adena Friedman (Nasdaq CEO) made comments expressing interest in possibly becoming a crypto trading platform.

Nasdaq further states they will likely wait for regulation to be sorted out, and for the crypto space to mature. But the point is – the interest is there from one of the most prominent financial entities. A Nasdaq crypto exchange would make the crypto space even more legitimate.

Crypto Hedge Funds

90 crypto hedge funds have launched so far this year, with another thirty estimated before years end. 600 hedge funds total are projected to launch this year (including traditional markets). If 120 of those 600 are crypto hedge funds, that means crypto would comprise 20% of that.

It makes sense that these hedge funds are only launching as the result of interest in the crypto space. Crypto hedge funds also provide another on-ramp to crypto involvement for traditionally-minded people.

IBM’s Food Blockchain

IBM is another giant in the world of traditional markets. They are currently developing a method to track food using blockchain technology. IBM Food Trust as it’s called, is also collaborating with giants such as Nestle, Walmart, and Kroger.

Mainstream business giants see the potential in blockchain and crypto, and are becoming involved. More involvement leads to greater blockchain solutions to world difficulties (such as food origins and tracking).

ICE and the Bakkt Platform

ICE stands for International Exchange. They plan to launch Bitcoin futures trading in November, on a platform/ecosystem called Bakkt.

The big news is that these Bitcoin futures will be settled in actual Bitcoin, as opposed to the current CME and CBOE options that are cash settled. This would require the actual purchase of Bitcoin, causing more demand for Bitcoin holdings.

Bitcoin only has a total supply of 21 million coins. ICE will need to buy large amounts of Bitcoin for trading on the Bakkt platform. If entities like ICE continue to buy Bitcoin, less supply is available for the general public. Less supply could mean greater demand and higher price for Bitcoin.

Ripple, xRapid, And The Banks

Ripple/XRP is a touchy subject in the crypto space. Some people like it, and some see its centralization as a problem that goes against one of cryptocurrencies best qualities – its decentralization. Whether in support of Ripple or against it, Ripple news is still a sign that mainstream use and interest is building.

At its swell conference this year, Ripple announced the launch of xRapid – a product to change global remittance payments. There is said to be a significant amount of interest for xRapid’s potential from financial institutions.

It seems as though most of this information has not significantly impacted crypto asset prices (with the exception of Bitcoin ETF speculation in July). It will be interesting to see what happens when the crypto market finally turns around, and people start seeing the price action relating to such interest.


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Author: Benjamin Pirus
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Starbucks is Promoting Cryptocurrency!

Bitcoin (BTC)–Friday brought about a rather momentous announcement for the adoption of Bitcoin and cryptocurrency, when news broke that Starbucks is working on a collaboration to begin accepting crypto through a fiat intermediary.

LIONBIT

Called Bakkt, a global platform and ecosystem for digital assets, the exchange will allow for customers to trade crypto for fiat and participate in the purchase of items at Starbucks. While the company has since clarified that they will not be accepting Bitcoin directly, it does provide some level of validation for the industry in addition to giving the currency some much needed adoption-related exposure.

Bakkt Backed by Starbucks, Microsoft and More

Bakkt, the proposed exchange for simplifying the swap of BTC and fiat for market purposes, represents a collaboration between Starbucks, Microsoft and Intercontinental Exchange. Original articles ran with some misleading headlines that gave the appearance Starbucks was planning to outright accept Bitcoin for coffee. Instead, the company has made its intention clear that it wants to operate with cryptocurrency–albeit through the presence of a third party intermediary.

The news comes as a somewhat lackluster advancement for most diehard cryptocurrency fans. Investors and members of the community have had numerous opportunities to work with payment platforms, BitPay being one of the more popular, which convert BTC to fiat for purchases. However, the intermediary step neglects one of the primary functions of crypto: that it can work fine as a secure, digital payment in its present form without the need of exchanging to government currencies.

TIP

Nonetheless, interest from Starbucks and Microsoft is positive news for advancing Bitcoin’s brand and growing greater merchant-based adoption. Brian Kelly, a regular contributor to CNBC’s crypto shows, found the move to be overwhelmingly positive,

“It’s very big news for bitcoin because people say, ‘Where can you spend it?’ Now at every single Starbucks. Starbucks is seeing some kind of demand for acceptance of crypto and bitcoin, and to tie up with a huge regulated institution like the ICE is really positive for the space.”

Starbucks also held to its position as an innovator, viewing cryptocurrencies and digital assets as a possible extension for the company to stay at the forefront of societal shifts. Maria Smith, vice president of partnerships and payments for Starbucks, said in the statement confirming Bakkt that,
“As the flagship retailer, Starbucks will play a pivotal role in developing practical, trusted and regulated applications for consumers to convert their digital assets into US dollars for use at Starbucks. As a leader in Mobile Pay to our more than 15 million Starbucks Rewards members, Starbucks is committed to innovation for expanding payment options for our customers.”

While expectations were tempered via the follow-up announcement by Starbucks, clarifying that the company had no intention to deal directly with cryptocurrency, it does provide an avenue for greater exposure that could lead to direct BTC payments. At the very least, it helps fill the primary argument against cryptocurrency: that despite being defined as digital money, Bitcoin and other currencies have failed in giving users adequate outlets for spending.


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Author: Michael Lavere
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