What’s one critical factor preventing Bitcoin and other cryptocurrencies from entering into the mainstream from their partially-submerged position? Trust.
With trust comes transparency of process; general knowledge of how it functions, what role it plays in a given segment of the economy; and a fundamental understanding of what it is, and more importantly, what it is not.
But herein lay a fundamental problem. While most investors had wished they had gotten in early on stocks of industry leaders such as Google, Apple, or any high growth company now dominating the markets, investors think in the language of the tried-and-true; the mainstream-approved, the tested, the secure.Rarely do investors think or speak in the language of disruption and that has proven to be the crowd’s most consistent if not permanent weakness.
Bitcoin is rat poison, says legendary investor Warren Buffett. It will all “come to bad endings.” The entire investing world heard Buffett’s comments. Most investors took heed of Buffett’s words.
Meanwhile, when Intercontinental Exchange CEO and NYSE Chairman Jeff Sprecher announced his new cryptocurrency venture Bakkt, hardly anyone besides crypto-enthusiasts took notice.
Of course, this lack of mainstream attention and awareness is somewhat predictable. After all, who is Sprecher when compared to a legend like Buffett?
A lopsided comparison, it may remain that way. That is unless Sprecher’s venture succeeds. And if or when it does, the comparison will be as such that Buffett may represent a world of the past; Sprecher serving Wall Street’s future.
Bakkt may be the first cryptocurrency exchange to have a real and significant impact on Wall Street and mainstream markets. Anticipating a November launch, Bakkt aims to offer a market for Bitcoin that is federally regulated.
Backed by Microsoft, Boston Consulting Group, Starbucks, and ICE, Jeff Sprecher and Bakkt’s CEO Kelly Loeffler will launch a marketplace in which large financial institutions may be able to offer an expansive array of new products including Bitcoin mutual funds, ETFs, pension funds, and other mainstream crypto-investments.
This move may pave the way for cryptocurrencies to become a federally regulated AND decentralized currency and asset class, impacting the way Wall Street and Main Street do business.
As Loeffler states:
“Bakkt is designed to serve as a scalable on-ramp for institutional, merchant, and consumer participation in digital assets by promoting greater efficiency, security, and utility…We are collaborating to build an open platform that helps unlock the transformative potential of digital assets across global markets and commerce.”
Take note: Bakkt aims to provide services to financial institutions, merchants, and investors. Considering Starbucks’ active role in facilitating mobile payments, considering its large retail presence, and considering Starbucks’ role in backing this new venture, imagine what this might mean for Bakkt’s imperative toward servicing the merchant and consumer segment of the market.
Back to the opening discussion on matters of “trust,” there is one thing that ICE can offer that is lacking in every crypto-exchange in existence. A “trusted” third-party clearinghouse for what will remain as a “decentralized” currency (the founding principle upon which all cryptos were created).
ICE operates two of the largest futures exchanges in the world (ICE in the US and Europe). Not only will ICE’s presence eliminate credit risk for those who buy and sell cryptocurrencies, but their participation may also serve to legitimize the transactions.
Not only do cryptos provide the advantage lower transactions fees, not only do blockchain technologies offer higher efficiency and speed for financial transactions, but cryptocurrencies also offer the benefits of a decentralized currency whose value cannot be manipulated or degraded by a central bank.
One of the most significant impediments to cryptocurrencies, in general, is their lack of global adoption (by merchants and consumers).
Bakkt could change all of that.