Hackernoon logoThe Future of Cryptocurrency Futures and where Bakkt Fits in the Equation by@jitu

The Future of Cryptocurrency Futures and where Bakkt Fits in the Equation

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1. Bakkt has changed how investors thought about cryptocurrencies previously, thanks to its regulated infrastructure.

2. It’s a new leap for cryptocurrency futures with Bakkt now storing and safekeeping Bitcoin physically for Bitcoin futures. With this Bakkt has gained trust and applaud amongst institutional investors.

3. Being backed by ICE and partnering with Starbucks, Bakkt has created new hope of widespread cryptocurrency use for daily chores.
As it has been circulating in the news, Bakkt is now an approved institutional-grade Bitcoin futures exchange platform. The news is big, as for what the iconic currency lacked till now, was trust.
Top dogs of the tech and finance world have invested heavily to make Bakkt happen. Microsoft, Starbucks, and Boston Consulting Group have all partnered with Bakkt to realize the real potential of cryptos.
Bakkt has now made it possible to place trust in Bitcoin futures and have shown some significant improvement in overall investment since its inception. More and more investors are now able to place their trust in the platform, drawing them in to invest in Bitcoin futures. It’s a win-win for both cryptos and the investors, as futures contracts are promising they will bring at least a bit of stability to the currencies.

Let’s move onto the point now, about what crypto futures are all about, and what Bakkt is all about.

And after we know about both, let’s conclude with how Bakkt is going to impact the future of cryptocurrency futures.

So, what are Cryptocurrency Futures?

Just like futures for commodities, there has been for quite some time now, futures for cryptocurrencies. But unlike commodity futures, there’s was no
physical storage of cryptos for the futures contract.
So, it was basically a baseless word of mouth trade, and looking at the volatility of cryptos, things were pretty much out of hand.
The questions that surrounded it was if crypto futures were needed at all? Sure, they were. Crypto futures always had a few things that are essential
for any commodity to be considered of value. And that is, that the commodity must be of some value with a fluctuating price.
In the case of cryptos futures, what’s lacking is, efficient price discovery and transparency, along with some federal involvement to make sure the trade is safe.
We are all well aware of how futures are for institutional investors, but crypto futures come with a twist. With a greater fixation on prices, they
are sure to be beneficial to the mainstream investors too.
As crypto futures bring about stability, it means all the better for crypto as a whole. People will now start trusting cryptos more, especially after they are backed by federal government or laws.
Capturing about 67% of the total market cap of all cryptos, Bitcoin is what the investment platform is mainly focusing on. But it is of no question that some of them are also focusing on smaller but popular cryptos like Ethereum.
Bakkt is only open for Bitcoin now but will soon be including futures for other cryptos too. It is just the beginning for crypto futures, we will have to wait, and take it how it unfolds in the future.

And now, what is Bakkt?

Bakkt is a Bitcoin futures contract facilitator, institutional-grade infrastructure, along with it being federally regulated, is what Bakkt boasts of. It checks all boxes of making the future of crypto futures bright, along with making it mainstream for everyone in the coming time.
Starbucks being a partner and a future testing platform is a big leap for such a platform. With Starbucks in the game, a huge amount of people will take the leap to finally start using cryptos.
But that is not all for Bakkt, along with being able to make cryptos mainstream, it will also hugely affect the price volatility. As more and more
futures contracts are being invested in, the price will be more inclined towards lesser volatility.
Even though mainstream investors can’t buy Bitcoin futures, for now, Bakkt has enabled retail investors to do so. Retail and institutional investors play a very big role in the price volatility of cryptos, and it’s an excellent move by Bakkt to enable daily futures contracts to them.

Advantages of Bakkt

1. Regulated

Bakkt has the single greatest overall advantage against its competitors. It’s
regulated for futures by commodity futures trading commission (CFTC) and by New York state department of financial services (NYDFS) as a holder for physical Bitcoins.
Regulated warehousing of Bitcoin’s is a giant leap for crypto futures. The misplaced trust could now be focused, drawing in more and more institutional investors towards the cryptocurrencies.

2. Infrastructure

There’s a reason why Bakkt is an approved firm for holding physical
cryptocurrencies, and that’s it’s state of the art infrastructure. Not only are they offering insurances for Bitcoins they hold, but they are also taking care of the mistrust people withholding physical cryptos.
This leap not only is going to ensure they will enable more people to invest, but it will surely turn Cryptos into mainstream investment assets.
3. Transparent and efficient trading
Bakkt enables daily and monthly futures contracts for Bitcoin, giving the investors options which were hugely missing until now. With the extends of what Bakkt is offering, many investors who are into day trading might consider daily Bitcoin futures.
The efficient and transparent trading system will build more trust in investors while making keeping the trade fairly easy.
Physical delivery too, is one of the main MVPs of Bakkt, ensuring complete trust in and out. These advantages are actually some which make Bakkt different, and the reasons for its regulation and approval.

Disadvantages of Bakkt

Bakkt is like an ambitious project, it would have surely worked if it was just another commodity it dealt with. But we are talking about cryptocurrencies here, even their creator doesn’t know their full potential till now.
Nobody knows where it goes from here, but Bakkt really is trying it best to open it up to more people. Things might go south for the same, and many more people may be affected.
No concrete statements can be said for anything at all, we understand Bakkt can hold physical Bitcoins. But what if, the value is affected by a whale that can highly affect the overall price of Bitcoin by buying in or buying out?
Things can only be speculated for now, and for that Bakkt deserves real credit. Getting regulatory approvals and this kind of transparency was unheard of before Bakkt, and it’s only handling things step by step.

Final words on how Bakkt is going to change the future of crypto futures.

No matter how much we get swayed by either the advantages or
disadvantages of Bakkt, things can go either way. The world really craves something more than just regular commodity and stock market trade.
Crypto Coins are being minted every minute, based on their websites which are created by top website development companies. Bakkt will ensure more than just fair trade, it will build trust in all dimensions a user or an investor seeks.
Bakkt will not answer why Blockchain isn’t mainstream yet, it will provide it an opportunity to be trusted. And for once Bakkt’s federal approval truly sets a platform for crypto to be finally trusted.
The fuel to the fire was the already highly manipulated crypto token’s/coin’s pricing, which is based on simple demand and supply. There is nothing that can’t be manipulated on the internet, you just need the skill and the money to do it.
Bakkt is trying to change all that by involving high-risk physical storage, which will indeed make things better for investors and users. It is giving a platform that promises security, something that concerns most investors when they think of stepping in the crypto world.
We just need to understand, that there is no way things are going an age back. Crypto currencies are needed to change the world and Bakkt is doing a great job to make them all the more acceptable.
Simple market manipulation may work for now, for simply the involvement of investors and people is low. When everyone uses crypto, Bakkt will show its real potential and what it is made of.
The trust Bakkt is building surely holds the potential for increasing crypto usage. What will or won’t happen is another question, but Bakkt has got everything it takes to make the future of crypto futures brighter.
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