Dear Friends, all of us are eagerly waiting for bullish sentiments in crypto market, we all keep hearing news about CBOE (Chicago Board Options Exchange) ETF most likely to be approved in early 2019, FIDELITY stepping in crypto, & Bakkt coming in December 2018. In this post we will mainly focus on Bakkt .
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What is Bakkt?
Bakkt is a project owned, backed by ICE(Intercontinental Exchange) that runs 12 regulated exchanges including NYSE, The New York Stock Exchange. Bakkt is providing an ecosystem where Bitcoins can be traded in futures.Bakkt is introducing physically delivered Bitcoin Futures. Now you may wonder what is Bitcoin Futures.
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Before trying to understand Bitcoin Futures let's understand what is Future?
Future or Future Contract?
Well, It is a type of financial instrument in which two parties (Buyer & seller) share an agreement to buy or sell an asset at a set/lock price at a fixed price on a fixed date in future.
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Purpose of any future contract is risk management against the volatile nature of any asset/commodity.
Let's understand by taking an example, an airline ABC requires millions of barrel of petrol for running their planes and we know price of petrol is highly volatile say current price of petrol is 50Us dollar/barrel then what airline could do is to buy an future contract saying it will buy say 100 million barrel petrol at 51 US dollar after 1 month, therefore, avoiding the risk .
Now if the prprice after month say 54 US dollar/ barrel, ABC airline is in profit.
Futures could be settled daily or leveraged. Settled means cash amount deducted or added from your account without owning any commodity.
What is Long & Short?
We can enter in the future market either in short or long position.
Short- is to sell an asset at X price on Y date.
Long-is to sell an asset at X price on Y date.
Now Bitcoin futures works similar as above . We have to speculate/predict the price of BTC without owning it .
It is very useful for miners , miners can use these future contracts to hedge against price fluctuations. We already have Bitcoin futures available on regulated exchanges like Cboe and CME.
Purposes of Bakkt
a) Institutional investors - to allow Institutional investors to invest in Bitcoin & other cryptocurrency in secure & easy way.
b)Mass adoption to bring BTC & crptocurrency into real use. It is most important issue crypto faces today.
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As Bakkt is in partnership with Starbucks & Microsoft , Startbucks is selling tons of coffee per day all around world .
Imagine a scenerio when Startbucks allows us to have coffee for BTC.
Bakkt is first to introduce physical delivered BTC Future contract instead of cash-settled BTC Contract as in CBOE or CME which clearly tells Bakkt must buy BTC from market that will definately sky rocket the price of BTC.
Impact of Bakkt -Bullish?
According to Crypto Gurus, it is anticipated that Bakkt can help to give huge momentum to the market . Since Bakkt is providing physically delivered BTC Future it means BTC will actually trade on this platform since Starbucks whose daily sell is huge if it would be in BTC, it will definately give huge boom hoping it to be the bull run .
According to my personal view , we may not see huge volume by day1 of introducing Bakkt itself, it would take some time to build up but one thing is sure it will help BTC to adopted by masses.
Negative side of Bakkt
Since Bakkt itself will store BTC in their wallets,customers would not own private keys.
Thanks for taking time for Reading the article , Please give your views below how Bakkt could impact Crypto Market.