The owner of the New York Stock Exchange company is about to launch a new regulated platform that could allow institutions to invest seamlessly in bitcoin, and consumers to spend them more easily.
If ETFs will be useful to bring bitcoin to all investors, including institutional investors, and if Lightning Network can allow everyone to use BTC as a means of payment, Bakkt aims to do both.
But what is Bakkt?
To understand this, we have to start with the creator, Jeff Sprecher, and his wife Kelly Loeffler.
Sprecher is the President and CEO of Intercontinental Exchange (ICE), the company that owns the world’s largest stock exchange, the New York Stock Exchange (NYSE).
His wife is the CEO of Bakkt.
The idea of Sprecher and Loeffler is to create a so-called Bitcoin “second layer”, similar to Lightning Network, but integrated with an exchange.
Better yet, an entire ecosystem as regulated and solid as the New York Stock Exchange, which on the one hand allows all institutional investors to invest in bitcoin easily and without having to worry about any technical issues, and on the other, allows all bitcoin holders to experience fast transactions while trading, more or less like with the Lightning Network.
Of course, it would be a centralised system with related commission costs, but given that they have been working on it for 14 months and the launch is planned for November 2018, this project could play a crucial role alongside the approval of ETFs and the widespread use of Lightning Network.
Sprecher is known for being the first to act in order to exercise a real domain on a market, so it’s no wonder that he wants to get into the cryptocurrency sector.
As far as ETFs are concerned, February 2019 is now referred to as the date of possible approval, while for Lightning Network, the distribution on retail markets could probably take place during the course of next year.
Bakkt may be able to anticipate both.
In addition, Sprecher was able to involve both Microsoft, which offers basic technology services through Azure, and Starbucks in the project, although the latter has recently denied that this could soon lead to the possibility of paying with Bitcoin at their stores.
However, the Bakkt project also has the objective of enabling immediate bitcoin payments, which compete with the services currently offered by payment cards.
Everything starts with a new future on Bitcoin, which should be approved in November, and that, unlike the previous ones, has BTCs as their underlying.
Bakkt will physically hold the private wallet keys in which the BTCs will be stored, and will allow on their platform the exchange of new futures based on physical bitcoins.
At that point, the transition to a “second layer” that allows the exchange of these futures is behind the corner: it will be by exchanging the possession of BTCs, and not BTCs themselves, that these Bitcoin payments will be similar to Lightning Network.
The technical details are complex, and there will be a way to go into them later. By being a fully regulated market, Bakkt allows institutional investors to invest in Bitcoin without any particular problems (more or less as they could do with ETFs), and to exchange the ownership of BTC in a very easy and fast way (as you could do with Lightning Network).
The three main advantages of this new platform are its timing, given that it is due to be operational in November, its ease of use, which is probably within everyone’s reach, and, above all, its full regulation, given that there are rumours that it will be approved by the Commodity Futures Trading Commission (CFTC).
The main disadvantage is the lack of decentralization, but while this will most likely be of little interest to many users, the Lightning Network remains fully functional and decentralized, so there is an alternative for those who do not appreciate centralization.
There are those who argue that this new platform will finally make Bitcoin accessible to everyone, especially to all those institutional investors who until now have not wanted to invest because there were no similar instruments.