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DEUTSCHE BANK RESEARCH
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Thomas F. DAPP
Probably, the best-known example of the P2P technology in application is Bitcoin, the controversial cryptocurrency. Incidentally, cryptocurrencies differ from conventional currencies in that the value of the currency is not guaranteed by law or an institution, but instead by trust in the underlying technology.
However, the blockchain technology behind Bitcoin has much more to offer than a mere cryptocurrency. For example, discussions also involve standardized, fully automated and programmable agreements, reffered to as smart contracts, that can be processed via the P2P network – bypassing intermediaries, national borders and even regulators.
Blockchain technology is one of the first truly disruptive ideas from the fintech sector. After all, pure blockchain theory says that not only will individual business divisions of traditional banks become redundant in future, but there could also be a real paradigm shift in the prevailing financial system, because many intermediary services could be replaced by a P2P network.
Therefore it comes as little surprise that traditional banks and other players from the financial sector are now taking increasing interest in this new technology. Several financial institutions have already established what are known as innovation labs that deal exclusively with all the technology involved in the blockchain. Stock exchanges, credit card firms, clearing houses and insurers are also increasingly focusing on the technology and analyzing the potential of the P2P movement for their own purposes.
This may be because established intermediaries want to get an idea of whether the blockchain is actually a threat to their existence or may ultimately even offer numerous opportunities to implement new proprietary technologies which will raise the digital profile of traditional transaction banking, boosting its efficiency and, above all, execution times.
Banks could configure their system in a user-friendlier fashion for less tech-savvy customers and enhance their offer with extra personalized financial services, which the blockchain cannot do as things stand today.