The blockchain technology ecosystem, which includes digital currencies like Bitcoin, has a potential to occupy a central role in how companies conduct business.
The blockchain technology ecosystem, which includes digital currencies like Bitcoin, has a potential to occupy a central role in how companies conduct business in the future, the chief investment officer (CIO) of Deutsche Bank has said.
In a presentation earlier this month where they were explaining how blockchains and cryptocurrencies work, Christian Nolting, who also doubles up as the German banking giant’s global head of wealth, and Marcus Muller, the head of the bank’s global CIO office, made a number of bold predictions regarding the future of the technology.
According to the two top Deutsche Bank executives, blockchain technologies have a huge potential, and their numerous opportunities could be put into full realization within the next decade. They predicted that by 2027, approximately 10% of the global GDP could be tracked and regulated using blockchains. Nolting and Muller also forecasted that the blockchain technology is going to sustainably transform the business model of many organizations because of the transactional nature of digital currencies.
Unlike fiat money, blockchains allow people to exchange financial products and other assets in a much faster, cheaper and more secure manner yet without any need for a traditional regulator or intermediary such as a central bank thus reducing the asymmetry of information being exchanged between sender and receiver.
But the two bankers were also a bit lukewarm on cryptocurrencies. While blockchain as a technological ecosystem is quite promising, the highly speculative nature of digital currencies arising from their lack of intrinsic value and central bank backing makes them less promising. There is also the ever-growing potential for hard forks to come up with new currencies, while unnecessarily causing inflation.
However, Deutsche Bank isn’t giving up on digital currencies yet. According to the presentation, the bank believes that blockchain money can make a good fiat alternative, more so in countries experiencing runaway inflation. But they will probably require more security and regulatory measures to be considered stable enough to achieve a proper asset classification level. Generally, cryptocurrencies could evolve in many possible directions, with competition amongst themselves and government intervention being some of the key factors that could help steer their growth and development. Central banks could, for instance, create their own digital currencies to replace the private ones currently in circulation.