2018-12-4 23:05 |
Bakkt Creates Buzz, Claims Their Platform Will Lead To Many Future Bitcoin Investment Products
Bakkt is one of the biggest news stories of the year for the crypto community. We already know about Bakkt’s primary crypto product scheduled to launch in early 2019. Bakkt recently created more buzz, however, by hinting about launching more crypto products in the future.
In a tweet from last week, crypto platform Bakkt hinted that the company could launch more crypto products in the future. Furthermore, Bakkt’s effective price discovery mechanism will allow other crypto companies to launch crypto investment products in the future.
Bakkt’s flagship platform is scheduled to launch in January 2019 after initially scheduled for November 2018. That platform is expected to serve as an on-ramp for institutional and retail investors searching for a safe and easy way to access the crypto space.
Of course, Bakkt isn’t the only company launching a crypto exchange. So why is everyone getting excited for Bakkt?
Part of the reason is the institutional support behind Bakkt. The company is owned and operated by ICE, the parent company of the New York Stock Exchange. Microsoft, Starbucks, and other major American corporations have also thrown their weight behind Bakkt. Bakkt could be the platform that gets America’s biggest financial institutions and brands to dip their toes into crypto.
Now, Bakkt is hinting about developing more crypto products in the future beyond simply a crypto trading platform. Here’s what Bakkt tweeted:
“Key to cryptocurrency's success is a trusted market price. We are working to create a regulated form of price discovery, which could open the door for other products around crypto”
Bakkt added that:
“We understand and anticipate a learning curve for institutions as they get more involved in digital asset market.”
The comments were made as part of Bakkt’s appearance at Consensus Invest. Bakkt CEO Kelly Loeffler made the keynote speech at the event.
Is Bakkt Hinting That It Could Launch A Bitcoin ETF?The tweet above seems to hint about a bitcoin ETF. The much-anticipated bitcoin ETF has been on the horizon for months. However, the SEC has denied all bitcoin ETF proposals to date.
One of the reasons the SEC has denied all bitcoin ETF proposals is because of the lack of effective bitcoin price discovery. Yes, we have bitcoin futures markets and cryptocurrency exchanges that facilitate price discovery in the crypto space. However, bitcoin futures are enormously leveraged and do not involve real, physical bitcoin. Crypto exchanges, meanwhile, engage in wash trading that manipulates the price. Both of these problems prevent effective price discovery.
That’s where Bakkt wants to help. Bakkt’s tweet suggests that it will facilitate better price discovery in the crypto community.
Better price discovery is the primary thing preventing a bitcoin ETF from being approved. If the bitcoin world can implement effective price discovery, then it could remove the final barrier to bitcoin ETF approval.
Other Potential Bakkt Crypto ProductsAbacus Journal made an interesting point about Bakkt’s statements. ICE, the parent company of Bakkt, is the world leader physically deliverable gold markets. After launching physically deliverable gold market, ICE eventually launched other products based on those gold markets, including all of the following:
Physical gold readily available to be purchased by consumers with a number of different entry points
Gold ETFs that have been approved across the board and on several exchanges Gold mutual funds Gold derivatives Gold futures Gold optionsICE launched all of these products after launching physically deliverable gold markets. Now, Bakkt wants to bring that same experience to bitcoin and crypto. That could lead to all of the products above.
Gold ETFs aren’t as old as you may think. They emerged in the mid-2000s. Gold, like bitcoin, had growing pains over the years. Thanks to the formation of markets that encourage effective price discovery, however, there are now many different ways to buy gold – from ETFs to futures to options and more.
Bakkt CEO Kelly Loeffler Hints About Other Bakkt ProductsDuring her keynote address, Bakkt CEO Kelly Loeffler made a number of interesting points about the direction of crypto, including how Bakkt might launch new crypto products.
“Our goal is to make digital assets more liquid, trusted and accessible, allowing meaningful innovation to follow” explained Loeffler in her address. “Many in our space are working toward this objective.”
Loeffler then explained that Bakkt plan to go global by launching bitcoin futures in the USD, GBP, and EUR:
“By virtue of passporting ICE Futures U.S. and ICE Clear U.S. into other jurisdictions outside the U.S., institutions operating on a global scale can better serve their customers. Bakkt’s first contracts will be physically delivered Bitcoin futures contracts versus fiat currencies, including USD, GBP and EUR. For example, buying one USD/BTC futures contract will result in daily delivery of one Bitcoin into the customer’s account. This aspect of physically delivery adds to the utility of Bitcoin, beyond simply trading.”
Loeffler also emphasized Bakkt’s flagship service and how it could impact the community:
“The foundation on which we are building our solutions for buying, selling, storing and spending digital assets…is built upon the time-tested, regulated futures markets – which have advanced markets ranging from coffee to gold for hundreds of years.”
Loeffer also added that the key to adding more bitcoin products in the future is the formation of a trusted, effective price discovery mechanism.
If Bakkt can create effective price discovery in the crypto space, then other crypto products should follow. We saw something similar with gold: once a market has effective, trusted price discovery, it allows the creation of other investment products. Now, ICE aims to repeat that success with the launch of Bakkt in January 2019.
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