Blockchain and Intermediaries: Can DLT Eliminate the Middle Man Process?

Why Blockchain Will Never Eliminate Intermediaries

Given the decentralized nature of blockchain technology, many believe it will ultimately lead to the demise of third parties and other intermediaries. However, that is not necessarily going to be the case. Some refer to this as the “alternative opinion on blockchain,” and it’s some worth exploring in greater detail.

Beauty Of Bitcoin

The true beauty of Bitcoin is that it allows for the digital storage and transfer of financial value. Everything is peer-to-peer without interference from a third party, such as a bank. It has taken trust out of the equation and helped to eliminate the middleman from the financial arena.

That being said, blockchain is not necessarily applicable to every possible financial transaction. Intermediaries typically have a specialized skill or role to play during a financial transaction. This is sometimes referred to as delegacy, something that not even blockchain technology can do away with completely.

The Automated Process

Think back to how people booked hotel reservations before they could do so online with just a few clicks. You might get tips or advice from people you know. You would then call to get a reservation. On the off chance they were out of rooms, you’d have to find a journal or other source of information about nearby hotels. If that didn’t work, your next option was usually to seek out a travel agent, who could find you a hotel but would also charge a fee. Only then would you be able to book a room, arrive at the hotel, and relax for the night.

Alas, booking sites came along with listings, reviews, ratings, and any other piece of information you could ever need about a hotel. You could even book the room on the sight in a manner of minutes. Things have even gone one step further today. You can simply meet someone to receive the key to a hotel or apartment after already receiving a digital key.

This is what’s known as the automatization process. What’s fascinating is that once one step becomes automated, often times the next step in the process will become automated as well. For instance, the room preparation process when you stay at a hotel. Once the hotel maid is finished cleaning and preparing the room, the status of the room is changed so you know the room is ready for you. Things may even go a step further in the future, as rooms may have cameras that turn on as soon as the previous guest has checked-out. Of course, there is still an intermediary in this process, namely the booking website.

The next step in decentralization is not only having cameras in rooms, but air conditioners, door locks, and other parts of the room with APIs that link directly to those seeking access to the data they offer. Blockchain is capable of providing this kind of transparency and appears capable of always being able to take things one step further. However, as mentioned at the beginning, while blockchain will continue to contribute to the automatization of certain processes, it won’t be able to replace middlemen.

Always A Middleman

Keep in mind that BTC coins are a form of mined data. Within that database, coins are transferred from one address to another. However, you can only transfer BTC coins within the Bitcoin network. You can’t transfer other digital tokens or fiat money inside the Bitcoin network. The system ultimately becomes self-sufficient enough to eliminate intermediaries.

However, national registries still require intermediaries to input data into them. Digital platforms still require middlemen to verify your identity and confirm that the hotel or apartment you “digitally own” permanently or temporarily actually exists. This will continue with or without blockchain. Even within blockchain, there are the middlemen commonly called oracles who collect real-world data and enter it into the Bitcoin database. It’s because of these oracles serving as intermediaries that the trust needed to transmit data on the blockchain is minimized.

Blockchain And Process Automation

With the help of blockchain technology, data can be reconciled between two independent parties. The database may be distributed, which helps to increase the uptime of the system. Any data can also be synchronized across an infinite number of servers. Also, any changes in the database can be managed by parties that are either independent or at least partially independent. This kind of flexible data alignment is what makes the automation of certain processes possible on top of the added security.

Having a database that’s built on blockchain can be immensely helpful when it comes to audit work. Businesses that require frequent inspections can give regulators an auditor-node that’s synchronized with their database. This allows the inspection to be done online and without any paperwork. Once the required drivers within the blockchain ecosystem are available, such an audit will be possible, although it will not completely take out the need for a middleman. At the same time, certain documents can only be confirmed by physically going to an office, something that can’t be helped with automatization.

The other ways that blockchain is capable of contributing to the automation process include:

  • Minimize Trust in Intermediaries – Having several intermediaries makes it easier to trust middlemen and the work they’ve provided.
  • Reduce Time ConstraintsBlockchain technology will create a scenario in which each intermediary is just a part of the common-for-all system rather than using a service for specific tasks.
  • Reduce Cost of Intermediary Service – As exemplified by the hotel room example, automation helps to expedite the time in which certain processes can be accomplished.


The oracles and validators of the blockchain system are inherently similar to middlemen. As it pertains to Bitcoin, intermediaries can be avoided because each user helps to perform the work that was previously performed by a third party. However, with regard to national registries, trading platforms, and voting registries, it’s impossible to avoid intermediaries who are needed to insert data into the database. Blockchain may revolutionize certain processes and the ecosystem in which they take place, but it will never completely get rid of intermediaries and the important work they contribute, regardless of the automation of processes.

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