Bill Barhydt, CEO of cryptocurrency wallet and investing app Abra, said that the idea of private blockchains, such as enterprise blockchain platforms, will “eventually fail miserably.” During Fortune’s “Balancing The Ledger” show on February 25, Barhydt argued that the idea of a truly decentralized cryptocurrency contradicts the notion of private blockchains.
Private blockchains, unlike public ledgers such as those of Bitcoin (BTC) and Ethereum (ETH), are permissioned networks with access controls that restrict who can join. That means that they operate exactly like a traditional centralized database system. Bitcoin and Ethereum networks, on the other hand, can be accessed by anyone.
Speaking on the show, Barhydt said that that enterprise blockchain solutions were a concept similar to that of an extranet, a local network protocol that gained popularity in the 1990s. Both are controlled private networks that only allow access to an authorized set of customers or users. In Barhydt’s words, the extranet phenomenon is “exactly what’s happened with all this enterprise blockchain nonsense.”
“People have this fallacy idea that they’re going to make blockchain work inside the firewall […] It’s all going to fail miserably […] It’s all about a truly decentralized cryptocurrency and a private blockchain… it just makes no sense,” he said.
During the interview with Fortune, the CEO of Abra also commented on JPMorgan Chase’s recent launch of its bespoke digital currency, JPM Coin. He believes that, whether intentionally or not, the banking giant misrepresented their new project. According to Barhydt, the JPM Coin seems more like “a ledger meant for settling trades” than a coin. If the bank’s project turns out to be a private blockchain and a private coin, “it’s a complete waste of time,” he said.