Deutsche Bank: cryptocurrencies are "highly speculative"

Deutsche Bank team believes that by 2027, about 10% of world GDP will be somehow connected with blockchain
11 December 2017   1254

Chief investment specialist Christian Nolting and Deutsche Bank IT Director Markus Muller published a presentation in which they presented their views on the prospects of blocking technologies.

According to experts, the potential impact of innovative technology on the financial market is comparable in scale with the advent of the Internet.

We expect that the blockchain will change the business model of companies in a sustained way. The blockchain technology enables a faster and cheaper exchange of assets and financial products between individuals without an [intermediary], which reduces the asymmetry of information between the individuals.
 

Deutsche Bank Presentation 

In addition, bankers are confident that by 2027, about 10% of world GDP will be somehow connected with blockchain.

Nevertheless, financiers responded coolly about the crypto-currencies themselves, calling them "highly speculative", given the lack of the original value or support from the central bank.

The presentation notes that although crypto currencies can become an alternative to fiat, especially in countries with high inflation, digital money must first be assigned the status of a legal asset and create an appropriate regulatory framework.

Also, bankers expressed concerns about the hardforks used to create new crypto-currencies. In their opinion, frequent "splits" of blockchain can lead to inflation.

In addition, central banks could develop their own cryptocurrencies and replace the private ones in the market.
 

Deutsche Bank Presentation 

I worth reminding that only this year it became known about at least five new "bitcoins": forks Bitcoin Cash, Bitcoin Gold and Bitcoin Diamond have already taken place, two more - Lightning Bitcoin and Bitcoin God - are planned for the second half of December.

BIS to Issue Research on Bitcoin Problems

Researcher from the Bank of International Settlements believes BTC should abadon PoW
22 January 2019   81

Researchers from the Bank for International Settlements published a report in which they stated that only by abandoning the Proof-of-Work mechanism of consensus, Bitcoin could get rid of its current and future problems.

According to them, in the future, when the size of the rewards for mining drops to zero, transaction processing fees alone will not be enough to justify the miners' activities. Consequently, the Bitcoin network will become so slow that it will be impossible to use it, the authors argue.

Simple calculations suggest that once block rewards are zero, it could take months before a Bitcoin payment is final, unless new technologies are deployed to speed up payment finality. 
 

Raphael Auer

Principal Economist, BIS

The BIS admits that second-level solutions such as the Lightning Network can ease the task, but “only fundamental remedy would be to depart from proof-of-work.” According to the report, the transition to alternative consensus mechanisms “require some form of social coordination or institutionalisation”.

The Bank for International Settlements contributes to the cooperation of 60 central banks from various countries of the world, which account for 95% of global GDP.

Earlier this month, the agency disclosed statistics on central bank initiatives in the field of state digital currencies. According to him, about 70% of central banks conduct research related to the issuance of national digital currencies, but plans for their implementation and the perception of the issue vary considerably in different countries