NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, July 6, 2016

Bitcoin is an interesting experiment that is no threat to the banking system. That’s the conclusion reached by analysts at Citi Research in the latest of their series of reports on the technology behind the digital currency and its potential.

Bitcoin is essentially a successful proof-of-concept of a digital currency, states the report, written (like the others) by Keith Horowitz with contributions from Adrien Porter, Frieda Liao, and Michael Cronin. It’s not exactly meant as a compliment, because that is all the group is willing to credit to the cryptocurrency. Comparing a decentralized network like bitcoin to centralized networks like, well, like the entire existing global financial infrastructure, the Citi team concludes that the centralized networks work as well as, if not better than, bitcoin.

“Having written three reports on the topic of blockchain,” the group writes, “one common theme we have observed is the limited use-cases for the peer-to-peer transfer of value due to a number of issues including scalability, network adoption and lack of a legal/regulatory framework for dispute resolution.”