This article is from:Blue Fox Notes (ID: lanhubiji)This article is from:
, the original author Mark Helfman, translated by SIEN, reproduced by Odaily with authorization.
Bakkt is jointly developed by Intercontinental Exchange, the parent company of the New York Stock Exchange, Starbucks, Microsoft, and Boston Consulting Group. It provides institutional-level custody of cryptocurrencies, futures trading with physical delivery, merchant payment, compliance and other services. It was established in August 2018 and launched user testing of BTC physically delivered futures contracts on July 22, 2019. Bitcoin futures contracts with daily settlement and monthly settlement are currently launched. So, what will Bakkt bring? Why is it launched? The author of this article, Mark Helfman, believes that Bakkt is the best hope for Wall Street to maintain its dominance. This article was translated by "SIEN" of Blue Fox Notes.
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How Bakkt Can Save Wall Street?
Bakkt is interesting because it allows financial professionals to buy, sell and trade cryptocurrencies using an enterprise-grade trading infrastructure tailored for cryptocurrency traders. It plans to use Coinbase as a prototype for derivatives, investment services, and the sophisticated tools large investors need to manage their money.
Most importantly, Bakkt will assume all regulatory and operational risks of buying and selling cryptocurrencies, including custody, security, insurance and liquidation of all transactions.
Basically, Bakkt empowers institutions and large investors to trade "safely" with clear rules, regulations and expectations. At some point in time, it will also offer merchant solutions such as credit cards and payment processing. Bakkt has built a complete market from the ground up with one purpose: to dominate the cryptocurrency market, just as its sister company, the NYSE, dominates the stock market.
If you have used cryptocurrencies, you will realize that Bakkt is completely unnecessary and redundant. When you buy stocks, clear trades, buy CDOs, or trade derivatives and other financial products, you need Wall Street. You need a broker, you need a dealer, and you need an investment firm. You need people in it.
Download a bitcoin wallet? Anyone can do it. Sign up for Coinbase or Gemini? Simple. If you can learn how to use a checkbook, you can learn to use a bitcoin wallet. If you can learn to order food online, you can also learn how to sign up for a cryptocurrency exchange. You don't need Wall Street.
That's the whole point of cryptocurrencies: anyone can use them.
Does Wall Street matter? Yes, of course it matters. It plays a pivotal role in the world economy. It pools small amounts of money from many people into large funds. Governments, businesses, farmers, banks use these funds to grow, make money, and create jobs. Through Wall Street's operations, investors can get a small return from it.
That's actually how Wall Street got started. In 1792, the U.S. stock market was chaotic and rife with fraud. A group of traders form an agreement in a house on Wall Street to trade with each other using only fixed, transparent fees. They set up small businesses around Wall Street and help them with settlements, liquidations, certifications, notarizations, and all legal and administrative activities consistent with orderly, efficient operations. (Blue Fox Note: 1792 mentioned in the article is an important year in the history of American securities trading. In 1792, 24 brokers in New York jointly organized the "New York Stock Exchange" at 11 Wall Street, also known as the "New York Stock Exchange So" predecessor.)
Over time, it grew to become the financial center of the United States. For financial institutions, it is a huge profit center.
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Cryptocurrencies Let Its Profits Lose
Cryptocurrencies make Wall Street services obsolete.
Once assets are tokenized and recorded on the blockchain, you don't need a clearing house. Once developers create user-friendly smart contracts and decentralized exchanges, you don’t need a broker-dealer. Once distributed financial applications are popular, you don't need trading firms.
You will no longer need Wall Street to provide legal and administrative services such as clearing, processing, certification, brokerage of financial transactions, etc.
Finance as a whole will move to a network of professionals like AirBNB and smaller companies connected by technology. You've probably seen the trend in FinTech, which is moving away from clunky, bureaucratic companies to nimbler competitors like Personal Capital, SoFi, Circle, and other start-ups (some of which are subsidiaries of Wall Street firms).
Cryptocurrencies will accelerate this trend.
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Bakkt is Wall Street's best hope for keeping profits
Bakkt won't change the trend, but it can lead. It can incubate technologies that make smart contracts more useful. It fosters networks, connecting entrepreneurs and cryptocurrency businesses. It can develop the infrastructure to support mass crowd adoption of cryptocurrencies. It can use its image and credibility to build public trust in the legitimacy of cryptocurrencies.
Consider the famous words of Mahatma Gandhi:
"First they ignore you, then they laugh at you, then they beat you, and finally you win."
