Bakkt, a joint digital cryptocurrency platform between Starbucks, Microsoft and Intercontinental Exchange was announced a few weeks ago, with aims of operations to begin in November this year. It announced that it would help bring institutions, merchants and consumers in a single platform. Bakkt is said to bring about a way to bridge the gap between cryptocurrencies mainstream adoption.
Bakkt’s CEO Kelly Loeffler highlighted that Bakkt will not be using the usual margin trading concept but instead a collateralized system which is pre-funded.
In a medium article Loeffler mentioned, “A critical element to price discovery is physical delivery. Specifically, with our solution, the buying and selling of Bitcoin is fully collateralized or 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.”
The key features that the platform aims to achieve are a transparent and efficient price discovery, an infrastructure for institutional investments, and a consistent regulatory construct.
Bakkt even mentioned the concept of a full collateralization through its official Twitter handle;
With our solution the buying and selling of bitcoin is fully collateralized or pre-funded.
Our new daily bitcoin contract will not be traded on margin, use leverage or serve to create a paper claim on a real asset.
— Bakkt (@Bakkt) August 20, 2018
A Twitter user by the name of ‘namikaze’ asked an essential question as a reply to the official news by Bakkt.
How will you prove that you have the BTC you say you do?
— namikaze ⚡️ (@missionprotocol) August 20, 2018
Proving on holding Bitcoin will lead to a lot of questions from the crypto community. The most notable and first stable cryptocurrency – Tether faced a similar backlash when asked about proving the physical backing of U.S Dollars.
Tether cleared the air by giving full online access to the bank accounts to a legal firm. The legal firm Freeh, Sporkin and Sullivan LLP (FSS) claimed that the holdings of $2.55 billion were in two different banks.
Thomas Lee, the co-founder of Fundstrat Global Advisors, shared insights on Bakkt and it’s needed in the market right now.
1/ A week since the @ICE_Markets announced creation of #Bakkt (https://t.co/rBsA06ASnB) and after conversations, it seems it is not entirely clear what differentiates #Bakkt **Call-out to Justin Saslaw of Raptor Group has been really helpful here. Some insights:
— Thomas Lee (@fundstrat) August 9, 2018
An important point to note of ICE which is one of the partners in Bakkt is the existing relationships it already has with top financial institutes. According to Lee ICE has links with JPMorgan and Fidelity Investment. Along with this ICE is the parent company of the New York Stock Exchange with a substantial financial resource of $85 billion in assets and $6 billion in revenues.
So far, as it stands, Bakkt is living up to the predictions and expectations from leading cryptocurrency experts.
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