Bakkt, the cryptocurrency platform launched in 2018, has raised concerns about its ability to sustain its operations. In a filing with the U.S. Securities and Exchange Commission on Wednesday, Bakkt stated, “We might not be able to continue as a going concern,” expressing doubts about the adequacy of its cash and restricted cash to fund operations for the next 12 months.
Bakkt, initially established by Intercontinental Exchange (ICE), the parent company of major derivatives exchanges and the NYSE, aimed to facilitate bitcoin transactions for Starbucks customers. Despite this ambitious goal and the appointment of future U.S. Senator Kelly Loeffler as its first CEO, the company faced challenges in gaining traction. The intended use of bitcoin and blockchain for everyday payments has encountered limited success, with Bakkt’s initial focus on enabling coffee purchases with bitcoin evolving over time.
The company shifted its strategy in 2021 by introducing a digital wallet, but this offering was discontinued in the subsequent year. Bakkt has since redirected its efforts towards providing cryptocurrency custody and trading services. The latest filing reveals the financial strain Bakkt is experiencing, prompting the company to explore selling up to $150 million of securities in an effort to address its financial uncertainties.
The struggles faced by Bakkt underscore broader challenges within the cryptocurrency industry regarding the practical use of bitcoin as both an asset and a currency. While initiatives like the Lightning Network aim to enhance the efficiency of bitcoin transactions, achieving widespread adoption for everyday payments remains elusive. Bitcoin, often regarded as a store of value akin to gold, encounters obstacles in fulfilling the role of a currency due to transaction processing times and scalability concerns.
The Lightning Network represents a layer-2 blockchain solution designed to offload Bitcoin transactions for more efficient processing. The tension between viewing Bitcoin as a store of value and desiring its utility as a currency poses a dilemma for the cryptocurrency community. In light of these challenges, Bakkt’s potential financial struggles underscore the complexities associated with bridging the gap between cryptocurrency and everyday payments. The company’s shift towards crypto custody and trading services reflects an adaptation to the evolving landscape of the digital asset industry.
Digital Assets Desk