Cryptocurrency exchange Bakkt, having completed a special purpose acquisition company (SPAC) combination with VPC Impact Acquisition Holdings, saw its shares slip early in its first day of trading. At this writing, the stock was down a bit more than 1%.
But beyond the vagaries of intraday pricing action, the listing itself shows the continued entrenchment of the connected economy. Bakkt, of course, is focused on platforms and the drive toward flexible spending across rewards, loyalty and cryptocurrrencies.
In several examples of that flexibility, the company’s platform traces its roots to bitcoin futures trading but has expanded to enabling crypto holders spend their digital offerings on everyday items. In addition, the company launched a Visa debit card earlier this year. Bakkt users can leverage the debit cards with Google Pay to make purchases online, in-store and anywhere Google Pay is accepted.
Digital assets like bitcoin will be converted to fiat currency to enable these payments.
Bakkt has also said it plans to add new analytics and new artificial intelligence (AI), machine learning and geolocation functionality to its platform.
Connecting Far-Flung Activities
As profiled in this space previously, the goal is to connect what have traditionally been far-flung activities and to make illiquid assets spendable ones.
In an interview with Karen Webster, Bakkt CEO Gavin Michael said converting digital assets into cash that is spendable (or sendable), he said, could unlock as much as $1.2 trillion in value stored in those assets. As reported with that interview, the platform works with financial institutions (FIs) and merchant partners, helping them with the infrastructure and capabilities to access new markets and offer new products at scale, while users can choose a range of redemption options at the point of sale.
Delving into a recent investor presentation, the company notes that its capabilities can be accessed across channels. The firm estimates its total addressable market is as large as $1.6 trillion, where the largest subsegment is tied to gift cards — at $703 billion, followed by cryptos at $564 billion, and then loyalty points/miles at $316 billion. Bakkt said last month that had reached 1 billion points and miles being linked on its app by users since the firm unveiled the app in March.
The overall market is growing by about 26%, as measured in a compound annual growth rate, and thus might be worth as much as $5.1 trillion by 2025. Key drivers will include international growth, increased digitization and new asset classes such as fractional share trading and NFTs. The company noted that its technology could be used to underpin central bank digital currencies (or CBDCs for short).
Against that backdrop, Bakkt estimated in the same presentation that its total revenues, less transaction based expenses, should grow at a CAGR of 75% through the next few years. Near-term markets will include Australia, Canada and the European Union.