Commerzbank: Future of Bitcoin is an 'Open Question'

Blockchain technology constitutes a "genuine revolution" in how decentralized systems are run, Commerzbank said in a March report.

AccessTimeIconMar 23, 2016 at 7:18 p.m. UTC
Updated Sep 11, 2021 at 12:11 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Blockchain technology constitutes a "genuine revolution" in how decentralized systems are run, Commerzbank said in a March report.

Authored by global equities economist Peter Dixon, the report touches on both bitcoin as well as its underlying blockchain technology.

Exploring both the benefits and risks of the emerging technology, Dixon writes:

"From a systems perspective, the blockchain is a genuine revolution. In theory, therefore, it offers the possibility of eliminating many of the risks associated with the conventional ledger system."

Because one of the market's biggest risk factors – third parties – are removed due to the blockchain's decentralized nature, "there are no intermediaries to introduce credit and liquidity risk which are thus virtually eliminated", Dixon writes.

The report walks through the major aspects of bitcoin, including its distributed network of transaction verifiers, or miners. At the end, Dixon concludes that the question of bitcoin's future success remains unanswered.

"The extent to which bitcoin will displace other currencies is open to question," Dixon wrote. "Although it has become more widely accepted as a medium of exchange, its use as a store of value depends very heavily on its stability."

He later goes on to write that the limited supply of bitcoins, as well as the speculative nature of the bitcoin trading market, could hurt the digital currency in the long term – but that the underlying blockchain tech could still see usage.

"But the bitcoin debate has sparked a genuine revolution with the introduction of the blockchain," Dixon concludes, adding:

"In the years to come, even if bitcoin is relegated to a footnote in monetary history, blockchain technology is likely to still be with us, even if some of the claims currently made for it prove to be exaggerated."

The bank is one of more than 40 institutions involved in the R3CEV blockchain consortium.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.