Gu Yanxi: Bakkt physical delivery futures will have a very big impact on the authenticity and stability of BTC prices.
Bakkt official website officially confirmed that Bitcoin futures trading will be officially released on September 23. Bakkt has attracted countless attention since its inception. The project was launched by ICE (American Intercontinental Trading Platform) and attracted the participation of 12 top investment institutions with a valuation of US$700 million after the first round of financing.
On the occasion of the Bakkt futures business, the vernacular blockchain introduced its business layout and its impact through interviews with industry expert Gu Yanxi.
Interviewer: Gu Yanxi, Dean of CBX Research Institute, practitioner and researcher of Blockchain and Encrypted Digital Assets, Gu Yanxi. He has an MBA from the University of Texas, a master's degree from the University of Notre Dame, a master's degree from the University of Science and Technology of China, He has extensive professional and management experience in leading financial companies, enterprise software companies and internet finance companies in China and the United States.
01 Bakkt's impact on the market
Vernacular blockchain : After Bakkt's spot-sold futures products are launched, what kind of users will be served, and what impact will it have on the existing trading market that provides futures services?
Gu Yanxi : After going online, Bakkt will push the trading volume of Bitcoin spot and futures to a very high level.
On the user's side, customers of Bakkt's originator ICE are likely to become Bakkt's customers. ICE is one of the three largest trading groups in the United States. It is also a leading trading financial institution in the world. It is the main choice trading platform for futures traders. If these financial institutions need to trade bitcoin, they can trade on the trading platform provided by Bakkt. .
In terms of trading structure, the volume of transactions on Bakkt is mainly provided by institutional traders. Regardless of whether it is ICE or Nasdaq, most of the transactions in the United States are institutional participation, including high-frequency traders, speculators, quantitative traders and hedge traders.
When Bakkt futures products are launched, they will be very attractive to institutions or individuals wishing to trade futures, thus affecting the existing futures trading market . We can divide existing futures users into compliant trading institutions and individual traders. Bakkt is a compliant trading platform that is regulated by the US for asset security and operations, and is more secure than other platforms.
For the trading institution, there is no CME or ICE option before, and it can only be traded on an entrepreneurial futures trading platform such as BitMEX. After Bakkt goes online, institutions and individuals who want to trade in futures will definitely prefer a compliant trading platform such as Bakkt (the CME has higher thresholds and standards), thus affecting the trading volume of existing futures trading platforms.
In addition, after the launch of Bakkt, the price fluctuations of Bitcoin should be smaller. Because the global spot trading price will be limited to Bakkt's daily futures price, it is impossible to deviate too much.
02 Why is Bakkt's market reaction not strong?
Vernacular blockchain : Bakkt was placed high hopes when it was revealed at the beginning of the year. After the recent listing date, the market did not respond much to this news. Why is this happening?
Gu Yanxi: The news release and market expectations are not so strong in causal logic, mainly because the existing market capitalization of Bitcoin is not very attractive to institutional traders. Bakkt offers Bitcoin trading venues, but now the market value of Bitcoin is still small, which is equivalent to the level of a mid-listed US company.
The trading volume of each institution will be very large, so if there is only one bitcoin futures transaction, it can not meet the trading needs of the institution. If Bakkt has enough liquidity, such as US Treasury bonds or index futures, it will attract many trading institutions.
Analogy, building a highway does not mean that there will be more cars on the road. The same is true for Bakkt, and the fact that trading venues are provided does not mean that you will be trading immediately. Bitcoin trading volume depends on the market demand for it.
03 Does Bakkt affect the launch of the Bitcoin ETF ?
Vernacular blockchain: In the existing blockchain investment derivatives, what is the impact of options, futures (physical and non-physical) investment derivatives on Bitcoin? Currently, options and futures have been or will be available soon, and the ETF is still not making significant progress. Do you think that after the launch of Bakkt, will it affect the launch of the Bitcoin ETF?
Gu Yanxi : First of all, the attributes of options and futures are different, and the people employed are different. Bitcoin-based options, mainly one-year options, have a long time, so they have little impact on Bitcoin. In comparison, everyone is more concerned about Bitcoin futures trading. The one-day futures based on physical delivery that Bakkt has introduced is actually a spot transaction of Bitcoin, which has a great impact on Bitcoin.
The trading platform for non-off-the-post delivery futures can inflate the trading volume and form a much larger amount of bitcoin trading than the actual one, as long as there is no simultaneous run. But Bakkt provides Bitcoin futures for spot delivery. Traders must hold Bitcoin in order to trade, so compliance and authenticity are much stronger. This will have a very large impact on the authenticity and stability of bitcoin prices.
Bakkt is based on spot collateral, the price is objective and true; secondly, due to supervision, market manipulation is not allowed, and the fairness of the practitioner can be guaranteed. Therefore, even if it is a spot dealer, it is not allowed to operate the market in conjunction with the market. Therefore, Bakkt's compliance attributes and product features will ensure that its transactions are fair, which is very important for investors.
Second, Bakkt's futures trading is definitely helpful for the launch of the ETF. One of the main reasons why the ETF did not approve before was the suspicion that the price was manipulated. Bakkt's trading will help to increase the authenticity of the price, and the trading price of Bitcoin worldwide will also be subject to the trading of Bakkt daily futures. If the false trade deviates from the Bakkt price, the flow will naturally go to Bakkt, and the trading platform without credibility will lose the trust of the trader.
Bakkt helps to ensure the fairness and authenticity of the market price of Bitcoin worldwide. However, Bakkt is only a trading platform. It does not guarantee that the price of Bitcoin is regulated under the global market, nor can it guarantee that other trading platforms are Fair and just, not manipulated.
If you want to do Bitcoin ETF, it must be based on the real trading price of Bitcoin. I think ETF is favorable for SEC approval based on Bakkt price ; if ETF is based on a comprehensive index of Bitcoin, like CME, he The transaction price of several trading platforms around the world has been chosen, and the risk is relatively large. Therefore, it is very important for the future Bitcoin ETF application to be based on which transaction price.
04 How do you view the layout of Bakkt in the digital asset ecology?
Vernacular blockchain : According to Bakkt's official website information, in addition to providing futures services as a trading platform, hosting and payment are also planned, and the payment business will help merchants and consumers, users and users to trade digital assets, Bakkt Pay wallet Also in development, how do you view Bakkt's layout in the digital asset ecosystem?
Gu Yanxi: I think Bakkt's vision is very correct. From the very beginning, it is the ecosystem that generates, stores, circulates and trades digital assets. This goal is absolutely correct.
Bakkt's strategic approach, in terms of trading, Bakkt chose Bitcoin one day futures trading, in this way to stabilize the price of Bitcoin. In terms of ecological construction, Bakkt is working with Starbucks to make retail payments for digital assets through Starbucks. The first payment media price chosen is Bitcoin.
But I think that this strategic approach is problematic and it lacks the existence of stable coins . The value of Bitcoin will change as a virtual asset. It is actually suitable for trading and storing value. It is not suitable for daily payment. Daily payment requires stable currency to ensure expenditure efficiency.
Bakkt originally wanted to buy coffee directly in Bitcoin, but the price of Bitcoin is so high that it is very difficult to pay for coffee directly. Bitcoin needs to be converted in real time, although it can be reduced by technology and business, but bitcoin The nature of the transaction medium is inconsistent, so it is actually a very distorted design.
05 How do you see the cooperation between Starbucks and Bakkt?
Vernacular blockchain : Starbucks is one of the founders of the Bakkt project, with more than 30,000 stores worldwide, and is very profitable into the payment scenarios of digital currency. In the case of Facebook and Wal-Mart's stable currency this year, how do you view this cooperation between Starbucks and Bakkt?
Gu Yanxi: First of all, Bakkt will have a lot of bitcoin. Choosing to issue stable currency is also an option to consider. As for which distribution method, I think the longer-term solution should be based on mortgaged bitcoin. Issue stable currency. This is the longest and most viable mode at the moment. But how to do it, you need to look at Bakkt's own options.
Starbucks can of course issue stable coins on its own like Wal-Mart, but I think Starbucks may not be directly involved in this process because its focus is on coffee and user experience, and financial product services can be operated in a cooperative way.
Therefore, the high probability event is that Starbucks will cooperate with the provider of the stable currency, and will not develop the stable currency by itself. As for whether Starbucks is likely to cooperate with other stable currency providers, depending on whether Starbucks has signed an exclusive agreement with Bakkt, I think Starbucks will not sign an exclusive agreement.
06 What is the impact of the United States accelerating the digital currency ?
Vernacular blockchain : Since the beginning of this year, Facebook and Wal-Mart have to issue stable currency, and Bakkt has been listed on custody and other related financial licenses. A series of events have attracted much attention and continued discussion. This year, the US has accelerated the pace of digital currency promotion. What role does the entire industry and China's industrial development play?
Gu Yanxi: There is definitely a promotion. China's digital currency research and mobile payment in Shenzhen is a big decision, but it depends on the policy.
In addition, I believe that the development of digital currency to the present stage, many digital currency trading platforms and derivatives trading platforms in the market, most of which were created by private entrepreneurs, and the degree of development is also different. I believe that with the launch of the Bakkt service and the previous CME, it will affect the acceptance of Bitcoin by regulators and investment institutions. As a trading product, Bitcoin will have more compliance agencies to participate in the transaction, and the acceptance of related derivatives will also increase.
The United States has set a precedent, and other regulatory areas will follow up and follow suit. Global trading volume, because the participation of these compliant trading platforms will expand, the existing trading volume will be diverted to the compliant trading platform, which will bring impact and differentiation to the existing cryptocurrency platform. Adapting to this change will be a very big challenge for the industry.
Message Mining No. 308: What impact do you think the bitcoin futures for physical delivery will go online? why? Feel free to share your opinion in the message area.
Source: vernacular blockchain
『Declaration : This article is the author's independent point of view, does not represent the vernacular blockchain position, and does not constitute any investment advice or advice. 』