EXPERT OPINION | Why Consortium Blockchains Have Mostly Failed According to Ethereum Founder

Speaking at an event, Vitalik Buterin, the Founder of Ethereum, has said:

“The original vision of consortium blockchains – the idea that you have 5 banks or major companies that come together and create their own chain — has been mostly a failure.

I think the reason why is it ends up inheriting most of the disadvantages of centralization and most of the disadvantages of decentralization at the same time.

The first five banks join, and they all feel like ‘Yay, we’re building a system together. We can all be part of it.’

But then once bank #6 and bank #7 and bank #29 come in, they’re joining a system where there’s already an established power structure, established participants, and basically to them it still feels like they’re joining some kind of centralized thing that’s controlled by a cartel.

You don’t actually gain the benefits of true openness that people are looking for. You don’t have Etherscan. You don’t have a connection to an open, public network.

At the same time, if you build on one of those systems, you have to figure out how to program distributed systems; you lose privacy – you might think you still have some, but the reality is you’re putting your data on a network where the only people that get to see it are you and all your closest competitors.

From a privacy perspective, it actually doesn’t make much sense.

The compromise between centralization and decentralization that actually makes a lot more sense is: you have an application and today that application is a server. You can keep your server, but instead, we’re going to add scaffolding on top to give users extra security guarantees.

You put Merkle roots on chain.

You put proofs on chain.

And you give your users assurance that whatever is happening inside of your system is actually following the rules.

So you have high scale, high performance, and you optimize for a minimal delta for existing centralized infrastructure deployment.

Keep your existing infrastructure the way it is, and you just add a side car that makes the roots and the proofs.”

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