A new Deutsche Bank Research report suggests the bitcoin network is in some ways failing to live up to its original vision.
Released on 9th December, the Deutsche Bank paper notes that the bitcoin ecosystem now includes “a number of financial intermediaries” despite the fact that it was created to be a decentralized peer-to-peer (P2P) cash system without such entities.
Intermediaries, according to the report, include bitcoin exchanges and hosted wallets, which author Heike Mai indicated have highly centralized liquidity within the alternative financial system.
“The original idea of bitcoin – to create a peer-to-peer scheme that is independent of intermediaries and central agents – is to some degree being overhauled by real life. The bitcoin ecosystem now includes a number of financial intermediaries, like wallet providers and exchanges, and these show a trend towards concentration.”
Overall, the report seeks to examine the role of cryptocurrencies and distributed ledgers in the broader shift toward real-time payments, with Mai stating that the emerging technology offers a “novel” design proposal for such a system.
“Although still in its infancy, blockchain technology might revolutionise the financial industry which is characterised by tiered, centralised networks in many markets,” the report reads.