What is Bakkt?
Bakkt is an open, seamless global cryptocurrency platform and network designed to enable both consumers and institutions to buy, sell, store and spend digital assets. The ecosystem intends also to offer physically settled one-day Bitcoin futures contracts and Bitcoin warehousing. Bakkt is a product of the same company that created the praised New York Stock Exchange, The Intercontinental Exchange.
The move is expected to have a number of effects on the cryptocurrency industry, some of which we will discuss below.
Influential firms on one platform
Institutions, merchants and consumers will be able to benefit from cryptocurrencies in the global market as well as efficiency, security, and utility. Bakkt is designed to provide a wide range of services, including derivatives, custody solutions and asset-tokenization systems, featuring applications for both merchant and consumer.
Founder and Chairman and CEO of Intercontinental Exchange Jeffrey C. Sprecher said that by developing a connected infrastructure will generate “confidence” in crypto asset class on a “global scale” in line with the company’s track record of bringing transparency and trust to “previously unregulated markets.”
This project can encourage large non-crypto businesses to venture into this market. Also, the platform is backed by influential firms with experience in global financing and in commodity markets, making the network’s infrastructure favorable for institutional investors.
Bakkt system is conducted by ICE, which is in good relationships with some of the largest financial leaders like Fidelity Investment, JP Morgan and Charles Schwab. This connection could help facilitate the inflow of more money and investments into cryptocurrency space and help boost the markets.
ICE also operates 23 regulated exchanges and has a vital role in the New York Stock Exchange as well as 6 payment houses which provide trading for thousands of different assets and derivatives.
The firm also connects firms and the markets they can invest in, trade and manage risk. It also delivers market data and connectivity in almost all market asset classes. They have aided companies in raising more capital than any other exchange in the world.
The platform is clearly geared towards institutional investment. Bakkt is financially backed up by venture capital firms. If these firms are willing to get involved in the crypto space, this can determine even larger firms to come onboard. This is will most likely happen if Bakkt meets all regulatory rules and secures approval for its operations moving forward. The reverse is also possible: if large investors approve of Bakkt’s operations, then small-time investors can also join as well.
Without significant institutional backing, the crypto market has been infamously volatile. The lack of institutional money because of volatility has stopped them from investing capital which could actually reduce volatility. It’s obvious, then, that Bakkt’s involvement in the market can only reduce the anxiety felt by naturally conservative investment entities.
Facilitating Cryptocurrency Usage
In addition to encouraging adoption by institutional systems, the platform will enable businesses that want to accept cryptocurrencies and simplify the conversion of digital assets into fiat.
There are many reasons why a business would want to accept cryptocurrencies for its products and services- for instance cryptocurrencies would be a much better payment method for businesses in countries with ongoing high inflation rates or for avoiding high fees on both ends for international payments well as to help evade credit card fraud and fees for global shipments.
However, an easier exchange between crypto and fiat, a process with many hurdles such as conversion issues and exorbitant fees, is necessary because companies cannot just stop using fiat at least for the time being- it is easier to store, as it has more stability and a higher adoption rate compared to cryptocurrencies.
So the system will aid any particular company or institutional investor to access both fiat and cryptocurrencies, globally, and without having to worry about the risks, volatility and regulatory concerns.
Ability to trade and tokenize anything
Bakkt’s ecosystem is aiming to merge all benefits of cryptocurrencies and make it possible for businesses to access them on a single platform. This is a special feature, as it gives the possibility to tokenize anything, from real estate, art or any other item or service. Any tokenized item can then be traded in parts or portions to a single or many investors.
In comparison to fiat, cryptocurrencies and blockchain make it much easier for this process to happen. This ecosystem will also help those that sell the tokenized property to spend, receive or store fiat too for tokenization because the conversion process between crypto and fiat is more fluid. For instance, the system could help tokenize important data, computer processing power, bandwidth on a decentralized network etc.
Bakkt will definitely open the door to many investors, big and small, to enter the crypto market, and possibly help stabilize it through an influx of capital.