The Intercontinental Exchange (operator of the NYSE and 23 other major exchanges) just announced that they will be creating a new clearing platform for digital assets. Additionally, they are planning on working with some of the largest businesses in the USA to encourage the use of digital currencies. If that wasn’t enough for one announcement, the Intercontinental Exchange may be introducing Bitcoin futures that are settled in actual bitcoin.
According to Mike Novogratz, the involvement of a major financial entity like the Intercontinental Exchange was necessary in order to clear the way for institutional investment in crypto. This program could do just that, but it also appears to be designed to help consumers enter the cryptocurrency market.
Major retail-driven companies like Starbucks are said to be involved in the Intercontinental Exchange’s new platform, that they are calling “Bakkt.” The Bakkt platform will help retailers clear crypto transactions and offset any risk to their business that the new digital currencies create. The Bakkt platform will probably expand the role of cryptos, but the architecture of the system doesn’t seem to be in-line with DLT based ideas.
Is Intercontinental Exchange a third-party?
The details of how Intercontinental Exchange will facilitate crypto transactions via Bakkt wasn’t disclosed in great detail. From the press release, it would appear that the crypto transactions on their platform would be handled by Bakkt, and not on the actual crypto blockchain.
Intercontinental Exchange may have found a quick way to eliminate the scalability issues that cryptos like Bitcoin have, but if this is the case, people are right back to trusting a third-party.
One of the most important parts of a cryptocurrency is the fact that third-parties are cut out of the transaction. Intercontinental Exchange’s solution to the problem is probably workable, but it may not be popular with many existing crypto users.
Real bitcoin delivery
While Intercontinental Exchange’s Bakkt platform may not be the scalability solution that crypto users were hoping for, their plan to create Bitcoin futures that aren’t cash settled could drive Bitcoin much higher. Until now the futures contracts on exchanges like the CBOE for Bitcoin have been settled in cash, which means that no actual bitcoins are involved in the transaction.
According to the same press release, Intercontinental Exchange may be introducing a Bitcoin futures contract that can be settled in actual bitcoin. If it is approved by US regulators, a bitcoin settled futures contract would probably bring many new institutional investors into the actual Bitcoin market, and push prices up substantially.
Nicholas Say was born in Ann Arbor, Michigan. He has traveled extensively, lived in Uruguay for many years, and currently resides in the Far East. His writing can be found all over the web, with special emphasis placed on realistic development, and the next generation of human technology.