In a move that could bring cryptocurrency one step closer to mainstream retail adoption, digital asset platform Bakkt announced on October 28, 2019 that it plans to begin testing a consumer-facing payments application with Starbucks in the first half of 2020. The initiative represents one of the most concrete efforts to bridge the gap between digital currencies and everyday consumer spending, potentially allowing Bitcoin holders to purchase their morning coffee using cryptocurrency for the first time.
TL;DR
- Bakkt plans to test a consumer crypto payments app with Starbucks beginning in early 2020
- Mike Blandina, Bakkt’s product chief, confirmed payment engineers have been hired and the platform is nearing completion
- The app aims to let consumers spend Bitcoin directly at major retailers
- Bakkt’s physically settled Bitcoin futures have been gaining traction after a slow September launch
- An options contract is planned for launch before the end of 2019
From Futures to Frappuccinos: Bakkt’s Consumer Pivot
Bakkt, the cryptocurrency platform backed by Intercontinental Exchange (ICE), has been primarily known for its physically settled Bitcoin futures contracts, which launched in September 2019. Now the company is setting its sights on an even more ambitious goal: making cryptocurrency usable for everyday consumer purchases.
Mike Blandina, who leads Bakkt’s product division, told Bloomberg that the company has already hired a team of payment engineers and that the core payments platform is nearing completion. The testing phase with Starbucks, one of Bakkt’s launch partners, is expected to begin by the first half of 2020.
For cryptocurrency advocates, the partnership represents a significant milestone. The ability to spend Bitcoin directly at a global retail chain like Starbucks has long been a aspirational goal for the industry, but technical and regulatory hurdles have made consumer crypto payments largely impractical until now.
The Challenge of Consumer Crypto Adoption
Using cryptocurrency for everyday purchases has historically been cumbersome. Existing solutions like Purse.io allow indirect Amazon purchases but carry inherent risks, while services like Bitrefill offer limited merchant selection. The fundamental challenge has been creating a seamless experience that matches the convenience of traditional payment methods.
Bakkt’s consumer app aims to solve this by integrating cryptocurrency payments into existing retail infrastructure. Rather than requiring merchants to directly handle Bitcoin transactions, the platform would handle the conversion and settlement on the backend, presenting merchants with familiar fiat currency while allowing consumers to spend from their cryptocurrency holdings.
The approach mirrors how many cryptocurrency debit cards function, but with the backing of a major financial infrastructure company and partnerships with established retail brands. If successful, it could significantly reduce the friction that has kept cryptocurrency largely confined to investment and speculation rather than everyday commerce.
Bakkt’s Institutional Platform Gains Momentum
The consumer app announcement comes as Bakkt’s institutional Bitcoin futures product has been finding its footing. The physically settled futures contracts, which launched to considerable fanfare on September 23, initially recorded disappointingly low trading volumes. The first day saw just 71 BTC traded, leading critics to dismiss the platform as overhyped.
However, volumes have been steadily climbing in the weeks since launch. The gradual increase in institutional interest has validated Bakkt’s model of offering physically settled Bitcoin futures — contracts that result in actual Bitcoin delivery rather than cash settlement — as a differentiator from the dominant CME Bitcoin futures market.
Bakkt has also announced plans to launch a Bitcoin options contract before the end of 2019, further expanding its institutional product suite. The combination of growing futures volume, upcoming options, and now a consumer payments app paints a picture of a platform rapidly expanding its footprint across the cryptocurrency ecosystem.
Regulatory Context and Market Conditions
The Bakkt-Starbucks announcement comes at a time of heightened regulatory scrutiny of the cryptocurrency industry. Facebook’s Libra project has faced fierce opposition from regulators worldwide, with key partners Mastercard and Visa departing the Libra Association in October. Facebook CEO Mark Zuckerberg was grilled by the U.S. Congress on October 23 about the project’s potential risks.
Bakkt operates under a different regulatory framework. As a subsidiary of ICE, which owns the New York Stock Exchange, the platform benefits from established regulatory relationships and oversight. The company’s futures contracts are regulated by the Commodity Futures Trading Commission (CFTC), providing institutional investors with a level of regulatory clarity that has been lacking in much of the cryptocurrency market.
Bitcoin was trading at approximately $9,256 on October 28, according to CoinMarketCap data, recovering from a volatile week that saw the cryptocurrency surge past $10,000 following Chinese President Xi Jinping’s endorsement of blockchain technology. The broader cryptocurrency market capitalization stood at approximately $220 billion, with Ethereum trading at $182.66 and XRP at $0.296.
Implications for Crypto as a Payment Method
The Bakkt consumer app represents a potential turning point for cryptocurrency’s utility as a medium of exchange. While Bitcoin was originally conceived as a peer-to-peer electronic cash system, its evolution has been primarily as a store of value and speculative asset. High transaction fees, slow confirmation times, and price volatility have made it impractical for small retail transactions.
Bakkt’s approach of handling the complexity on the backend — converting crypto to fiat, managing transaction speeds, and absorbing volatility — could address many of these practical barriers. If the Starbucks pilot succeeds, it could pave the way for broader retail adoption and finally deliver on cryptocurrency’s original promise as a functional payment system.
Why This Matters
The Bakkt-Starbucks partnership represents one of the most tangible steps toward mainstream cryptocurrency adoption in 2019. While much of the industry’s attention has been focused on institutional custody, ETF applications, and regulatory battles, the consumer payments angle has received comparatively less investment. If Bakkt can successfully deliver a seamless crypto payment experience at a retailer with over 30,000 locations worldwide, it would represent a paradigm shift in how people think about and use digital currencies. The project also demonstrates how established financial infrastructure companies like ICE are positioning themselves to bridge the gap between traditional finance and the emerging digital asset ecosystem.
Disclaimer: This article was written for informational purposes based on events from October 2019. Cryptocurrency investments carry significant risk. Always conduct your own research before making investment decisions.