Over the past weeks, some of the world’s largest institutions, namely Facebook and JP Morgan, have announced intentions to launch blockchain ventures. While many crypto enthusiasts have welcomed this news, there’s one caveat, these projects are likely going to be centralized beyond compare.
And to some, this simple fact isn’t something to be excited about.
Ethereum, JPM Coin, FB Coin — It’s All Permissioned
In a recent debate at South By Southwest 2019 — a tech-heavy, crypto-friendly conference held in Austin — Jimmy Song argued that there are only two subsets of blockchain technologies: private (permissioned) and public (permissionless). In reference to the whole “if you control your own keys, you control your own Bitcoin” argument, Song explained:
“You either have control over your stuff or you don’t. It’s a zero or a one… Blockchain is really useful for bitcoin. Everything else has a central point of failure.”
Per CoinDesk, the longtime Bitcoin educator and industry commentator then went on to draw attention to Ethereum, noting that he believes it is entirely permissioned. He cites the hack of The DAO, especially the part of the story where developers and other stakeholders reversed the effects of the game-changing imbroglio through a blockchain rollback.
Decentralized: no one can take your property away.
Centralized: someone gives you permission to keep possession of said property.
That's why decentralization is binary, not a spectrum. You either have self sovereignty over your own property or you don't. There is no in between.
— Jimmy Song (송재준) (@jimmysong) March 14, 2019
While Song didn’t explicitly mention cryptocurrencies backed by corporate America, like Jamie Dimon’s newfangled stablecoin or the rumored social media-centric offering from Facebook’s bustling blockchain team, his logic can be extended here.
As the Bitcoin Core client developer isn’t a fan of Ethereum, it would hard to argue why he would be amicable towards JP Morgan’s iteration of Quorum, a private ledger based on Ethereum’s technologies.
Related Reading: Facebook’s “Crypto” Currency Expected to Add Up to $19 Billion in RevenueSome Crypto Insiders Beg To Differ
Although Song is vehemently against centralized blockchain systems, some industry insiders have been a bit more open to the concept. Per previous reports from NewsBTC, Ari Paul, the founder of BlockTower Capital, noted that while the so-called “coporatecoins” will operate in an intranet-esque fashion, they aren’t all bad per se.
Paul elaborates that while these assets are inherently “uninteresting” to fervent crypto crusaders, who are enamored with censorship resistance, immutability, security, and peer-to-peer systems, centralized cryptocurrencies will “increase global interest dramatically.”
Laying out a hypothetical scenario, the BlockTower chief investment officer notes that 30 million of Facebookcoin users (10% of Paul’s hypothetical audience of 300 million) could eventually “stumble across Bitcoin,” meaning that the (decentralized) cryptocurrency’s community could double in size, no questions asked. Not only would this bolster adoption, but this influx of users would also increase Bitcoin’s network value, thus increasing the actual value of BTC.