The Intercontinental Exchange, owner of the New York Stock Exchange, has established Bakkt, a regulated ecosystem for digital asset transactions. The venture pairs Microsoft, Boston Consulting Group,
The Intercontinental Exchange, owner of the New York Stock Exchange, has established Bakkt, a regulated ecosystem for digital asset transactions. The venture pairs Microsoft, Boston Consulting Group, and Starbucks as partners.
Bakkt will operate federally regulated markets and cold storage facilities for Bitcoin and potentially other cryptocurrencies. CEO Kelly Loeffler described it as "a scalable on-ramp for institutional, merchant and consumer participation in digital assets by promoting greater efficiency, security and utility." The company also aims to "build an open platform that helps unlock the transformative potential of digital assets across global markets and commerce."
This venture competes with Coinbase, which counts Andreessen Horowitz among its investors.
Microsoft's partnership centers on cloud infrastructure. The company accepted Bitcoin for purchases in the past before stopping when transaction costs spiked. Microsoft remains bullish on blockchain technology.
Boston Consulting Group's role has not been spelled out. The firm maintains 90 offices in 50 countries and can contribute deep financial expertise. "Blockchain technology holds tremendous potential to enable new business models and trusted ecosystems," said Sean Collins, a senior partner at BCG. "By leveraging and developing fundamental market infrastructure, the Bakkt platform will enable firms across industries to accelerate a range of innovation."
Starbucks intends to let customers pay with Bitcoin at every Starbucks location. The coffee chain invented mobile payment apps; its mobile ordering system prompted fast food chains to follow suit.
Goldman Sachs dismissed Bitcoin's comeback odds. Yet Goldman Sachs has poured capital into Circle, a blockchain firm. The contradiction reveals the financial sector's conflicted stance on cryptocurrency.
Iqbal Gandham, UK operations chief at eToro, sees a pattern shift. "As three more goliaths enter the cryptoasset arena, 2018 seems to be shaping up as the year mainstream business woke up to crypto," he said. "These kind of landmarks are coming thick and fast. Rather than focusing only on price movements, companies are rightly spotting the potential for real world applications and want to get in on the action."
Kevin Murcko runs CoinMetro, a crypto exchange. "It's certainly a far cry from the Bitcoin of 2009," he said in an email. "The cryptocurrency once supported by anarchists and libertarians as something that would unfetter us from the global financial system and from capitalism is clearly being absorbed into that very system. To some, that might feel like an expedient betrayal, but of course, Bitcoin hasn't panned out as its inventor expected. Its popularity has led to a whole new financial market – one that financial institutions can't realistically ignore."
Bitcoin's price remained near its level from 24 hours before the announcement. What matters is adoption, not price movements. Mainstream financial companies and retailers backing Bitcoin signal that the asset is gaining traction among institutions that drive commerce. Bitcoin accepted at Starbucks next to Visa and Mastercard logos would signal legitimacy in ways price swings cannot.
How this unfolds will answer key questions. Will Bakkt limit Bitcoin purchases at Starbucks? Could off-chain transactions cut transaction costs? Will users hold their own private keys or will the company store them? Can the Bitcoin network handle the volume surge? How does the Lightning Network factor in? The Intercontinental Exchange says Bakkt will be ready to operate by November.
