Since the announcement about Bakkt by the International Exchange (ICE) on the 3rd of August 2018, a lot of reports suggested that Starbucks is preparing to accept Bitcoin payments. But, are these claims valid at all?
Forming a new company Bakkt
The announcement of ICE, which is the second-largest owner of financial exchanges in the world, said that ICE has some plans to form a new company, named Bakkt. This new company has the intentions to leverage Microsoft cloud solutions to create an open, as well as regulated, global ecosystem for digital assets. It is also partnering with Microsoft, Boston Consulting Group, Starbucks, and some other, in order to create an integrated platform which will enable consumers and institutions to buy, sell, store, as well as spend digital assets on a seamless global network.
The announcement also contained a quote from Maria Smith, who is the Vice President, Partnership, and Payments of Starbucks. She said that as the flagship retailer, Starbucks is going to play a pivotal role in developing practical, as well as trusted and regulated applications for customers to convert their digital assets into US dollars for use at Starbucks. She also said that as a leader in Mobile Pay to their more than 15 million Starbucks Rewards members, Starbucks is committed to innovation for expanding payment options for their customers.
This announcement also created a great deal of excitement amongst the crypto enthusiasts, traders/investors, as well as reporters and analysts. Brian Kelly of the Fast Money of CNBC called this the biggest news of the year for Bitcoin.
Starbucks doesn’t want Bitcoin but is interested in working with Bakkt
Shortly after the announcement of ICE, many people claimed that one implication of this news was that Starbucks was getting ready to accept Bitcoin as a means of paying for your coffee. Here, we have a few examples of what has been said:
Techcrunch: Starbucks will drop a significant hint at plans to accept Bitcoin.
Bloomberg: Buying your Starbucks fix with Bitcoin is now closer to reality.
CNBC: New Starbucks partnership with Microsoft will permit customers to pay for Frappuccinos with Bitcoin.
However, on the same day of the announcement, according to some sources, the coffeehouse chain tried to make it bright that it did not actually want Bitcoin, but it was only interested in working with Bakkt in order to develop solutions which permitted its customers to convert their Bitcoins into fiat currency, which they could actually spend of Starbucks.
One spokesperson said that it is essential to clarify that they are not accepting digital assets at Starbucks. Instead, the exchange is going to convert digital assets such as Bitcoin into US dollars, which can be used at Starbucks. Currently, he said that they are announcing the launch of trading and conversion of Bitcoin. However, they are going to continue talking with customers and regulators as the space evolves…customers are not going to have the ability to pay for Frappuccinos with bitcoin.
On the 26th of January, 2018, the chairman of Starbucks, named Howard Schultz, during the quarterly investor call of the company, said that the question is the problem or do you understand and are you anticipating what could actually occur with cryptocurrencies. The reason he mentioned this was not because he is talking about Bitcoin, because he does not consider that Bitcoin is going to be a currency today or in the future. He said that he is talking about the new technology of Blockchain, as well as about the event of what could occur not in the near-term, but only in a few years from now with a consumer application in which is trust and legitimacy about digital currency. He also said that he is not bringing this up because Starbucks is announcing that it is forming a digital currency or is investing in it. He said that he is bringing this up as they think about the future of their company and the future of consumer behavior too. He personally feels that there is going to be one, or maybe a few legitimate, trusted digital currencies of the Blockchain technology.
The statements of the chairman of Starbucks named Howard Schultz.
Then, he continued explaining why Starbucks had an important role to play. He said that we have to ask ourselves if we believe that that proposition is possible, how many companies or what company has the national or global footprints, and about the digital mobile payment trust and confidence which is integrated into its existing business.
There are going to be a lot of winners, a lot of losers too. However, he said that we are in a very unique position to take advantage of what other tech companies and the Blockchain technology are going to afford concerning the barriers to likely be in the mix of this and profit financially, benefit regarding user response and incrementality and importantly create long-term shareholder value.
He said that he believes we are heading into a new age, in which the technology of blockchain is going to provide an essential level of digital currency which is going to have a user application. And, he also believes that Starbucks is in a unique position to take advantage of that. They think that they possess something to offer the companies which are chasing this, as they are in a place to create the granted, legitimate place in which this could actually be allowed and possibly take advantage of the mobile payment digital platform which they have invented.
After a month later, on the 27th of February this year, in an interview with FOX Business, Schultz indicated that Starbucks might be considering supporting a virtual currency as a payment possibility in the future. He said that he thinks that blockchain technology is apparently the rails in which an integrated app at Starbucks is going to be sitting on top of.