Does Ethereum measure up for Wall Street? If history is any guide, the answer is clear
The annual Ethereum Denver event returned last week, with a group of crypto enthusiasts gathering at the rodeo grounds in Colorado’s largest city to dive deep into the world’s second-most popular blockchain. Unlike the loud, revival-like atmosphere of Bitcoin gatherings, Ethereum events have a vibe more akin to a tech-infused folk festival. This year’s conference was quieter than past editions that coincided with skyrocketing market rallies—but contrary to digital artist Beeple’s tweet about a deserted hellscape, it still had plenty of energy and featured major players, including SEC Chair Paul Atkins.
This year’s Ethereum Denver also comes as the blockchain seeks to prove it can succeed in traditional finance. While Ethereum has been central to many big banks’ blockchain trials, Wall Street has repeatedly tried to develop its own alternatives—systems with fewer ties to the established crypto community. And in recent months, it’s making another push to do so.
This is evident in a debate that has [blank] over [blank] and led [blank], [blank], and other major financial incumbents to test Canton, a blockchain not built on Ethereum. The crypto community, meanwhile, views ZKsync—a different privacy tool that runs on Ethereum’s architecture—as the better choice.
At first glance, big banks’ decision to opt for Canton (described as “kind-of-a-blockchain”) might suggest Ethereum could be frozen out of Wall Street’s current effort to upgrade its backend to digital ledgers. But history shows this is unlikely to happen.
A decade ago, during an earlier crypto downturn, the media highlighted R3—a company backed by a bank consortium that embraced the slogan “blockchain not Bitcoin.” The goal was to create a closed, walled-garden version of crypto where individual banks held significant control over operations. Unsurprisingly, the project has mostly failed.
More broadly, debates over private vs. public versions of new technology boil down to a choice between open and closed systems—and history proves open systems win in the long run. Famous examples include cable giant Time Warner’s failed attempt to sell the internet as a bundle of TV channels, or Microsoft’s lengthy but futile effort to suppress Linux. This dynamic is likely to repeat with blockchain. The reality is: whatever blockchain the traditional financial sector builds will probably be less secure and, over time, less popular.
Bank-built blockchains will also struggle to attract top talent. I was reminded of this during an on-stage conversation last week in Denver with Danny Ryan, a prominent early Ethereum figure with a Princeton computer science degree. Ryan now works at a firm he co-founded, [blank], which aims to bring Ethereum tools to Wall Street; its CEO, Vivek Raman, spent his career at firms like UBS and [blank]. It’s rare to find duos like that building tech for banking consortiums—another reason the traditional financial industry will struggle to create alternatives to Ethereum.
Jeff John Roberts