A new Deutsche Bank Research report suggests the bitcoin network is in some ways failing to live up to its original vision.

Released on 9th December, the Deutsche Bank paper notes that the bitcoin ecosystem now includes "a number of financial intermediaries" despite the fact that it was created to be a decentralized peer-to-peer (P2P) cash system without such entities.

Intermediaries, according to the report, include bitcoin exchanges and hosted wallets, which author Heike Mai indicated have highly centralized liquidity within the alternative financial system.

Mai writes:

Overall, the report seeks to examine the role of cryptocurrencies and distributed ledgers in the broader shift toward real-time payments, with Mai stating that the emerging technology offers a "novel" design proposal for such a system.

"Although still in its infancy, blockchain technology might revolutionise the financial industry which is characterised by tiered, centralised networks in many markets," the report reads.

Elsewhere, the report analyzes how different closed- and open-loop payment systems can achieve real-time global payments, offering an outlook for how it believes each can achieve this larger goal.

The findings suggest that Deutsche Bank, which joined the R3 distributed ledger consortium this September, is optimistic about the potential of decentralized cryptographic technologies, even if their future outlook isn't certain:

Notably, cryptographic ledger systems, the paper states, have to some extent already succeeded in bringing real-time payments to a relatively small market.

The report notes that while bitcoin transactions can take 10 minutes to confirm, consensus systems such as the permissioned Ripple protocol offer transfers "within seconds". Still, the biggest open question toward the use of these systems, the author reasons, is that the technology has only been tested on a small scale to date.

Should the scale of these networks be increased, Mai also speculates that new pressures may reshape how public blockchains like bitcoin operate.

"Sceptics expect that distributed (ie decentralised) payment systems will not be able to compete with centralised transfer systems on cost, unless they concentrate processing in fewer miners," he writes.

In addition, Mai says that blockchain systems still face many unanswered legal questions, such as how laws can be enforced in such networks without centralizing agents.

Read the full research report below:

Instant Revolution of Payments?

Deutsche Bank image via Shutterstock