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Wall Street’s growing embrace of private blockchains risks undermining the core value of blockchain technology, CoinDesk reported on Aug. 15.
Vivek Raman, chief executive officer of Etherealize, said in an interview that the spread of enterprise consortium chains could eventually set off a vicious cycle of competition among those networks.
A consortium chain is a private blockchain that limits participation to selected companies or institutions. Such projects have recently gained traction on Wall Street because they offer greater privacy for financial transactions and easier administration. Examples include Digital Asset’s Canton Network, Circle’s ARC blockchain for stablecoin payments and Stripe’s Tempo.
Raman argued that these closed networks could restrict the high liquidity and interoperability blockchain technology was designed to provide. He said a better approach would be to add the necessary permissioning and privacy features on top of open infrastructure.
He added that a global, open and permissionless infrastructure is needed as the base layer. Institutions should then build permission settings tailored to their needs at the application layer or on Layer 2.
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