Bitcoin Still Not Ready for Prime Time, Citi Says

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.’
On those levels, they don’t see a substantial improvement in bitcoin over existing systems. Right here is where the bitcoin true believers will scoff, of course, and the finer details of those points could be argued all day. However, there is one conclusion they draw that did catch our eye: ‘Domestic payment systems today are centralized,’ they write, ‘and provide the customer a relatively good experience.’

This post was published at Wall Street Journal on Jun 30, 2016.