Bakkt is a company under the New York Stock Exchange’s parent organization, Intercontinental Exchange. Hype has surrounded them ever since they announced physically settled Bitcoin futures for institutional investors. Initially, Bakkt was going after big money, but now they’re making an app for the masses.
This week, they released a some information about their upcoming project and hinted it’s capabilities. Apparently, they will be able to resolve some of the most important issues blockchain tech with an app, and their first partner is Starbucks.
Fast payments and settlements
“For merchants, this enterprise-grade infrastructure enables a new form of payment acceptance at a lower cost per transaction along with faster settlement times”
Bitcoin’s kryptonite is that it doesn’t scale well, meaning as the network grows, it’s already slow processing time can become even slower. The Lightning Network aims to solve this problem by building something that acts as an additional layer to Bitcoin that makes transacting faster while remaining decentralized. Still, this solution has been met with heavy criticism because it requires a two sided exchange. When you’re doing something like buying coffee, it’s a one way transaction.
So Bakkt has a solution to this issue, but it’s safe to assume that it won’t be decentralized. Bakkt will likely leverage its reputation to be a trusted, centralized party that facilitates transaction between a users’ wallet and the merchant. Announcing Starbucks as the first business partner for their payment service seems to be their way into gaining trust.
Onboarding consumers
“We’ll be launching a consumer app to make it easy for consumers to discover and unlock the value of digital assets, as well as ways in which they can transact or track them.”
Right now, Bakkt’s exchange isn’t for regular ole’ people. Their “get started” button links to their e-mail, and the site lacks a traditional “sign up” button.
Things will be different this time around, judging by their intentions to allow consumers to “discover and unlock” digital assets. The idea of letting people purchase crypto directly through an app used for transacting is their way of attacking the problem at every angle.
Bakkt’s vision for the future of crypto is sounding like an phone app that you can purchase bitcoin from and pay with. Something like Coinbase combined with Chase Pay.
What the Bakkt App missing?
One of the most appealing features of cryptocurrency is that it can distance you from your power. People talk about Bitcoin being a hedge against government failure, as a way to avoid banks and providing financial sovereignty. Whether or not it actually fulfills any of these assumptions is up to debate, but regardless, they are topics of interest.
In order for Bakkt’s app to accomplish its goals, they will need your trust. The only way they can allow fast transactions and settlement with Bitcoin payments is by knowing that you have enough money in your account, and crediting the merchant in fiat before anything is verified on the blockchain.
Essentially, they will send your BTC to themselves and a cash equivalent to Starbucks. Starbucks does not want to risk $3.99 to be worth $3.50 by the time they exchange BTC for fiat.
“You can’t even purchase things with Bitcoin” is the favorite line of crypto nay-sayers. Honestly, I’d question if Bitcoin holders even really want to buy Starbucks with Bitcoin. Since the asset isn’t stable, most people invest the assumption that it will grow in value. Nobody really holds 0% fiat and 100% Bitcoin, so why wouldn’t they just use the cash that doesn’t have much of chance to growing?
Still, with their innovation, at least the option will exist. People will no longer be able to say that you can’t buy coffee with Bitcoin, because Bakkt finds the transaction to be worth facilitating.