A Deep Dive Into Bakkt and its Mastercard Roll Out
Bitcoin

A Deep Dive Into Bakkt and its Mastercard Roll Out

9 months ago

CoinMarketCap takes a deep dive into Bakkt — a NYSE-listed crypto payment company behind the recent Mastercard roll out of cryptocurrency services to banks and merchants worldwide.

A Deep Dive Into Bakkt and its Mastercard Roll Out

Inhaltsverzeichnis

In mid-October 2021, the U.S. Securities and Exchange Commission (SEC) approved the buying, selling and trading of Bitcoin (BTC) futures exchange traded funds (ETFs) on U.S. stock exchanges. Despite discussions over allowing the trading of cryptocurrency on stock exchanges for several years, the recent agreement does not allow investors to directly invest in Bitcoin, instead, investors of these ETFs invest in a Bitcoin derivative — BTC futures contracts. However, the markets seemingly favor this news, as Bitcoin rallied to an all-time high, breaking $66,000. 

The ETFs are based on BTC futures contracts that have set BTC prices that the buyers and sellers will pay at the end of the futures contracts. This is in contrast to the futures derivatives sold on cryptocurrency exchanges where the final BTC price is the market price of BTC when the contract ends.

The ETFs approval from a highly-regulated SEC could be seen as, finally, a wider adoption of cryptocurrencies, albeit a derivative product in some cases. This long-awaited event comes on the back of more companies adding crypto products or services into their offering. A major one — Mastercard's integration of cryptocurrencies into its payment network, which consists of thousands of banks and millions of merchants — drew much attention. And one company is behind Mastercard's crypto roll-out — Bakkt.

Join us in showcasing the cryptocurrency revolution, one newsletter at a time. Subscribe now to get daily news and market updates right to your inbox, along with our millions of other subscribers (that’s right, millions love us!) — what are you waiting for?

What is Bakkt (NYSE: BKKT)?

Bakkt is a spin-off from the Intercontinental Exchange (ICE), the owner of the New York Stock Exchange (NYSE). Its purpose is to create a digital asset ecosystem that connects the digital asset world to the traditional finance world. The ultimate goal is for Bakkt’s platform to make the selling, buying and redeeming of digital assets on its platform to be a way for the traditional financial systems and institutions to enter the digital marketplace and serve customers in digital and traditional markets. 
Bakkt further plans to help its partners create more loyalty and reward point programs that attract the 18 to 44 year old demographic and to have programs available that cater to older investors who may be curious about cryptocurrency but unwilling to risk their investments and savings on it. Thus, the ability to convert their loyalty and rewards points, airline miles and other benefits earned from merchants into cryptocurrency and crypto investments goes a long way to making digital assets more attractive and accessible to people with little to no crypto knowledge and experience.

Vision for Digital Assets

Bakkt’s vision for digital assets housed and stored on its platform is to make it easy to convert to cryptocurrency, to invest in cryptocurrency derivatives (e.g., futures, options), and to settle payments using digital assets and fiat currency. However, this benefit is not limited to consumers. Businesses have new ways to reward customer loyalty and spending preferences. Moreover, they can create rewards that are attractive to people in different demographics and help expand their presence in the digital marketplace. 

As for financial institutions, they can now help tens of thousands of businesses use cryptocurrency for transactions, rewards, payments and the delivery of goods and services. The seamless movement of digital assets into the traditional finance world will create more interest in the digital world and,  in the end, result in significantly more investment, interaction and development of digital ecosystems and a closer relationship between them and traditional finance.

Bitcoin and Cryptocurrency Rewards

Ideally, more and more businesses will begin offering their customers BTC and cryptocurrency rewards for their spending preferences, activities, trading activities, etc. The consumers and businesses that receive the rewards will now be able to store them in a secure location and on a platform that is integrated into the digital marketplace and able to seamlessly work with non-digital financial systems. The key here is that the BTC and crypto rewards can be converted to fiat currency, exchanged services and goods of value off-line, and used to invest in cryptocurrency and BTC derivatives. 

As Bakkt’s end consumers (i.e. the general public), businesses and institutional partners recognize the benefits of using the Bakkt platform. They also understand how flexible cryptocurrency is and that it is a reasonable alternative to fiat currency and traditional credit. Thus, it is anticipated that there will be an increase in digital rewards to consumers and businesses, which will result in more interaction with the digital marketplace by everyone who becomes a subscriber to the Bakkt platform. Lastly, it will also help redirect money from traditional investment vehicles (e.g., stocks, bonds, CDs) and into digital investments that, while riskier, also produce higher returns on investment.

For example, Bakkt rewarded its platform subscribers with NFTs. The NFTs can be stored in the Bakkt ecosystem and used for a wide variety of things. The best part is that some of the people who received NFTs had to learn about them and then how to trade them. In essence, they were inducted into the digital world, NFTs in particular, by receiving free NFTs and then learned how to navigate Bakkt’s digital ecosystem while trying to make the most of their “free” NFT. With more reward programs like this and them becoming common, the digital world will flourish alongside traditional finance instead of it being a winner takes all game.

Who Are the Founders and Team Behind Bakkt?

The six founding members of Bakkt are Kelly Loeffler, Adam White, Mike Blandina, Chris Petersen, Nicholas Cabrera and Gavin Michael. Information about them and their roles at Bakkt is listed below.

  • The founder of Bakkt is Kelly Loeffler, the wife of ICE CEO Jefferey Sprecher. She was the first CEO and employee of the company after it was spun off from ICE. She stayed with Bakket from 2018 to 2019 when she resigned as CEO to work in the U.S. Senate to complete Republican senator Johnny Isakson’s term when he retired from the Senate.

  • Adam White was the second employee hired to work at Bakkt as its chief operations officer. Before Bakkt, White was one of the founding members of Coinbase. In 2019, Blandina became CEO after Loeffler resigned as CEO.

  • Mike Blandina was the third person hired to work at Bakkt. He filled the chief product officer position. In 2019, he became president of Bakkt, and in 2020 he left Bakkt for JP Morgan.

  • Chris Petersen was the fourth person to join Bakkt. He was hired to help launch Bakkt’s mobile application-based wallet. Petersen was chosen because at Google, his previous company, he worked as the payments product strategist.

  • Gavin Michael became CEO of Bakkt after Blandina resigned from the position in 2019. Before working at Bakkt, Michael was the head of technology for Citi’s Global Consumer Bank.

There is also a board of directors that helps to steer the company in the direction and to fulfill its vision. The five board members are Kelly Loeffler, Jeff Sprecher (ICE CEO), Sean Collins (managing partner at Goldfinch Partners), Tom Noonan (member of ICE board of directors and chairman of the Bakkt board).

Bakkt has had founders with experience in a variety of areas and lots of industry knowledge and connections. Their work on Bakkt and networks were crucial to helping Bakkt establish itself, form partnerships, and build up its ecosystem.

What Makes Bakkt Unique?

Bakkt separates itself from rival firms by creating a digital ecosystem that bridges the digital and non-digital world. It has created an infrastructure that is consistent and regulated. Moreover, it has transparent and efficient price models. Lastly, it provides institutional-grade pre and post-trade infrastructure. 

Customers and businesses are attracted to Bakt because it allows them to integrate cryptocurrency, crypto investments and traditional finance into everyday business operations. The variety of options available to both categories of users and their flexibility in choosing their options makes the platform even more irresistible. Ultimately, Bakkt seamlessly integrates its digital platform into traditional finance, allows its platform users to decide which one(s) they want to use to pay for goods and services, settle bills, and trade cryptocurrency and crypto rewards for digital and non-digital goods and services, and to be redeemed for fiat currency. Finally, Bakkt’s partnerships with Mastercard, Google and other industry leaders expand its influence, network, platform options, and potential solutions to fintech problems.
Furthermore, Bakkt provides crypto derivatives products for investors with higher risk appetite. It launched its own BTC (USD) monthly) futures and BTC (USD) monthly options. The dramatically increased interest and investment in BTC futures contracts will fuel more investment and higher returns from Bakkt’s BTC (USD) futures and options contracts. 

Moreover, with the SEC approval of BTC futures ETF, more people will experiment with BTC under a relatively less risky and more regulated context. This may prompt them to be more likely to get involved with directly investing in BTC derivatives on cryptocurrency exchanges. Finally, the crypto market is hoping that investors’ increasing interest and familiarity with crypto markets will translate into them directly investing more fiat currency into cryptocurrency.

Bakkt App: Crypto Services

Bakkt allows its platform users to convert their digital assets into other crypto investments, fiat currency, non-digital payments, and trade them for offline goods and services. The crypto services program also rewards its users with NFTs, cryptocurrency, and other crypto-related goods and services. The idea is to keep people in the crypto world as much as possible and to motivate them to explore their options on the Bakkt platform. As Bakt enters more partnerships, its platform users will have even more options available to them and seamlessly link them to the traditional finance world without them ever leaving the digital ecosystem.

Partnership with Mastercard

Mastercard has partnered with other crypto-related service providers to enhance the financial service options available to its customers. Its partnership with Bakkt has benefitted both companies by expanding the financial services that they can offer their customers. For example, Bakkt’s partnership with Mastercard increases the accessibility of cryptocurrency and crypto rewards to more than 20,000 businesses around the world.

The news of this partnership has caused BKKT shares to surge by almost 3X on the Monday it was announced. This move will allow Mastercard to provide crypto service their banking and merchant partners using the Bakkt platform. Bakkt announced:

“These include the ability for consumers to buy, sell and hold digital assets through custodial wallets powered by the Bakkt platform and streamlined issuance of branded crypto debit and credit cards. Mastercard will also integrate crypto into its loyalty solutions.”

Some of the benefits include the Bakkt Credit and Debit Cards which can be used anywhere that accepts Google Pay or Apple Pay. Platform users can even send their friends and family eGift cards and cryptocurrency. The best part, platform users can use their cryptocurrency to pay for coffee at Starbucks, offline bills, and even make crypto investments. The best part, the app shows you your up-to-date balances and lets you use cryptocurrency, credit, and fiat currency to settle bills and make payments.

This comes on the back of other crypto-related partnerships and acquisitions by Mastercard, such as buying leading crypto intelligence firm CipherTrace and partnering with Gemini to offer "crypto-back" credit cards.

Partnership with Google

Bakkt has partnered with Google to have access to Google Cloud, Google analytics and Google financial services. Google is a global behemoth with an existing infrastructure and data collection APIs that are unimaginable to most people. This global network, extensive information gathering system, and all-encompassing infrastructure mean that Bakkt has less work to do to expand its reach and influence in different markets and industries. 

Google benefits from Bakkt’s easy access to cryptocurrency and crypto investments. This enables Google to expand its presence into the digital world and to offer digital goods and services at competitive prices to its platform users, partners, and partners’ customers. Furthermore, Google Cloud has so much storage space and is so flexible and easy to operate in that it’s a literal tech playground for Bakkt’s research and development team.

Future Outlook and Roadmap for Bakkt

Bakkt has had numerous successes since it was founded, but it has refused to rest on its accomplishments. Currently, Bakkt focused on the following:

  • Building a broader partner ecosystem 

  • Expanding the access and utility of its digital assets

  • Gaining momentum in a space that continues to grow exponentially

  • Expanding its fintech services

To accomplish all those things, it must continue to grow and develop its services and ecosystem so that it can offer its future partners things that they cannot easily find anywhere else. Also, as the sum should be greater than the whole, Bakkt must continue to create offerings that don't already exist and that are relevant and of value to its three categories of users: consumers, businesses and institutions.

This article contains links to third-party websites or other content for information purposes only (“Third-Party Sites”). The Third-Party Sites are not under the control of CoinMarketCap, and CoinMarketCap is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site. CoinMarketCap is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, approval or recommendation by CoinMarketCap of the site or any association with its operators. This article is intended to be used and must be used for informational purposes only. It is important to do your own research and analysis before making any material decisions related to any of the products or services described. This article is not intended as, and shall not be construed as, financial advice. The views and opinions expressed in this article are the author’s [company’s] own and do not necessarily reflect those of CoinMarketCap.
5 people liked this article