Blockchain technology could be a major shift in the way companies operate, according to Deutsche Bank's investment manager.
In a slide show this month, Christian Nolting, also head of the global bank, and Marcus Muller, global head of the IOC office, explained how digital currencies and blockchains work and predict where they would go in the future.
According to the presentation, the "opportunities associated with blockchain technologies are huge", and could be fully implemented in the coming years.
Bankers predict that about 10% of the world's gross domestic product (GDP) would be tracked or otherwise "regulated" by a chain of blocks by 2027.
The presentation says:
"We expect the blockchain to change the business model in a sustainable manner, blockchain technology allows faster and cheaper exchange of assets and financial products between individuals without [intermediary] ] which reduces the asymmetry of information between individuals. "
Lukewarm on the coins
While blockchain technology is promising, cryptocurrencies are less so, depending on the presentation. The bank considers digital currencies "highly speculative" given their lack of intrinsic value or the support of a central bank.
Although cryptocurrencies may be an alternative to fiduciary currencies, especially in countries with runaway inflation, they need more regulation and security to become an appropriate asset class, depending on the presentation.
Digital currencies in general could evolve in many ways, with some of the main factors influencing their growth being state intervention and competition between different currencies.
The potential for creating new currencies by hard forks is also a potential concern because it could lead to inflation, depending on the presentation.
"In addition, central banks could develop their own crypto-currencies and replace private ones on the market," he adds.
Deutsche Bank picture via Vytautas Kielaitis / Shutterstock