Coinbase CTO, Balaji S. Srinivasan talked during the EthSanFrancisco conference about cryptocurrencies and blockchain technology. He mentioned that the banking movement of private and permisioned blockchains is overrated.
He says that he respects those working in the space and entrepreneurs, but he explained that the banking movement related to ‘blockchain not bitcoin’ is arguably overrated.
He says that blockchain without a native digital asset is something which would make users lose a lot of the real benefits behind a blockchain network.
About it, he commented:
“I think private blockchains may have a V.2 where people realize: hey I’ll do like a private ICO where it’ll be set-up like a joint venture where you have ten companies in a consortium, but they have actually a percentage of the token. Then it might actually work again, but I think the whole concept of blockchain without bitcoin was a dead end.”
Companies started to see that it was not necessary to think about a cryptocurrency to operate a blockchain network. And during 2014 and 2015, the first changes started to take place. At the moment, there are some banks and companies that are working with their own blockchain systems without relying on a specific token.
For example, Blythe Masters, a former executive at JP Morgan, argued that the most valuable aspect of Bitcoin was is blockchain rather than the cryptocurrency. Additionally, he believed that blockchain could be used as a technology in many different industries to improve processes and products.
This idea of having a blockchain network without a token grew and expanded between 2016 and 2017. This growth was also accompanied by the surge of Ethereum and its smart contracts. And indeed, several companies and businesses started to develop their own networks.
Srinivasan says that the blockchain needs a token of sorts. Some of these things can be related to monetary incentives inside the network.
One of these blockchain networks created by a financial institution is Quorum. Created by JP Morgan, it allows parties to easily share different information and transactions. According to Srinivasan, private blockchains are a sort of safe experimenting environment where it is possible to try different things. Furthermore, some specialists believe that private blockchains can be used within an environment of trusted parties.
For some use cases, it is possible to use a private blockchain and keep a record of some issues. The public blockchain would be used for other aspects that are more important for these institutions.
However, Balaji says that this off-chain are underrated. As the crypto space continues to grow and innovate there will be many other blockchain solutions and networks that are going to be implemented without depending on a specific token. Some of the most important companies working with their own networks are IBM ad JP Morgan.