Authored by: Omid Malekan, Adjunct Professor of Finance at Columbia Business School
Compiled by: Saoirse, Foresight News
In a world awash with power and greed, humanity has experimented with all sorts of blockchains. No one would claim Ethereum is flawless or failsafe. Paraphrasing Churchill: Ethereum may be the worst form of blockchain – except for all the other alternatives available in the market.
(Note: Winston Churchill, the British statesman and writer who led Britain against the Nazis during World War II, served twice as Prime Minister, and won the Nobel Prize in Literature.)
I spend much of my time debating peers in the crypto industry, many of whom are dear friends. Our most fundamental disagreement lies in the weight of decentralization in base-layer protocol design. My peers view decentralization as just one of many core features, while I firmly believe it is the only non-fungible core attribute. They prioritize scaling higher, whereas I see scaling as a derivative issue; they consider business development and industry partnerships essential for project success, I disagree; they think ample funding can propel a public blockchain, I argue excessive capital is destined to sink it; when industry voices tout the practical value of permissioned chains, I merely chuckle.
The most common criticism leveled against me is that my views are too idealistic and detached from reality, which is precisely the root of our divergence. My starting point for thought is never the naive fantasy of a utopian harmony.
Underlying Logic: Seeing Through the Inherent Nature of Corporations and Capital Through a Power-Lens
I am a realist deeply versed in human nature, having long studied history and dissected the evolution of human societal systems; I have also personally witnessed powerful institutions resorting to any means to preserve their power and extract commercial benefits. My entire analytical logic leans towards Machiavellianism. One only needs to see the operating rules of the real world to understand: those easily swayed by the hollow promises of tokenizing corporate databases are the true detached idealists.
To subscribe to mainstream industry rhetoric, one must simultaneously believe several assumptions that defy business logic: that profit-seeking enterprises prioritize technological innovation over their own profits; that the 'Innovator's Dilemma' does not apply to platform-based foundational technologies; that senior executives, well-versed in existing industry rules and commanding seven-figure salaries, genuinely wish for the complete upheaval of the current profit structure. I reject all of the above. I firmly believe in the inescapable inherent inertia of corporations. Only crypto systems maximized for decentralization have a chance to break free from the entanglements of capital and giants; all other compromised solutions will eventually be co-opted, corrupted, and lose their original design intent entirely.
The bedrock of all rules in the crypto industry is the power of incentive mechanisms. Any blockchain capable of gathering tens of millions of users and facilitating trillions in asset flow inherently generates motivations that corrode itself. Large corporations and even national governments, if they did not attempt to hijack such networks, would be acting against the logic of commercial survival. Ignoring blockchain development could even directly threaten the survival foundations of some traditional giants.
This was the reason major institutions collectively labeled Bitcoin a scam a decade ago, and it is the fundamental reason they now vigorously promote the notion that 'tokenization must follow rules set by corporations.' This operation itself is full of Machiavellian calculation: first, suppress the emerging technology with all one's might; if suppression fails, then switch to absorption and transformation. Only crypto networks that have adhered to an open, neutral positioning since their inception have a chance to evade this all-around encirclement.
Core Risk: Seizure of Internal Control is Far More Lethal Than External Attacks
When the industry discusses protocol security, everyone's gaze focuses on external attacks like 51% hash rate forks. But we should be more vigilant about the internal seizure of control by capital. While mechanisms to resist external attacks in established public blockchains have matured, the destructive risk posed by internal power grabs has become increasingly prominent.
Nearly all existing traditional financial exchanges, clearing systems, and even mainstream social media platforms have not escaped the outcomes of internal power grabs and platform degradation in their development histories. Visa and Mastercard are the most classic cases: both initially resembled prototypes of today's non-profit token alliance networks, only to completely transform into profit-seeking monopolistic tools; Google once publicly opposed advertising as a business model for search, yet has grown into the world's largest advertising service provider. This is the complete trajectory of platform degradation, and the inevitable end of the famed S-curve of growth once championed by prominent venture capitalists.
Compared to payment clearing networks and social platforms, the risk of a Layer 1 public blockchain being seized by capital is orders of magnitude higher. Programmable, asset-agnostic settlement base layers have a total addressable market far exceeding the sum of all traditional existing networks. A universal Layer 1 chain can cover vast scenarios including payments, securities clearing, social media, gaming, digital collectibles, ticketing, identity verification, etc., offering immeasurable space for capital to carve up, transform, and profit from.
From this logic, believing permissioned chains are viable is exceedingly naive – such databases can be shut down or have all data altered with a single command from the operator. Similarly, so-called permissionless Layer 1 chains with highly concentrated validator nodes, or public Layer 2 networks lacking zero-knowledge proof mechanisms and configured with only a single sequencer, are equally vulnerable. Placing faith in such centralized 'improvements' is tantamount to assuming all market participants will never be corrupt, institutions will never act maliciously, regulators and governments will always exercise self-restraint. To put it bluntly, it's akin to naively believing Visa sincerely hopes for Mastercard's prosperity.
Real-World Evidence: Corporate Consortium Chains Inherently Breed Oligopolistic Monopolies
The network seizure I describe is not mere speculation; there is already a complete template in the real industry. There is a company promoting a one-click controlled consortium database, whose CEO publicly declares its mission is to rejuvenate the standing of traditional financial intermediaries. In a recent interview, he earnestly argued that closed corporate consortium chains using Proof of Authority are fairer than open public chains using Proof of Stake.
His logic was: participating in an Ethereum consensus node requires a fixed capital outlay (approximately $60,000 at current market prices), whereas to join his consortium network, a new participant simply needs to 'prove their commercial value' to existing members for access.
But the reality is, Visa is already connected to this consortium network, while Mastercard has long been excluded. How can one enterprise prove its value to its biggest competitor? Taking it further: if Visa and Mastercard secretly formed an alliance, jointly entered this network, but colluded to block all other payment industry peers from entry, permanently solidifying their duopoly in the Western payment space, who could check them? How would fintech startups aiming to completely reshape the payments industry 'prove their value' to this trillion-dollar industry giant? By humble pleading alone?
If you think my judgment is too harsh, it only means you haven't fully traced the development history of the payment clearing industry. Don't take just my word for it; go ask small banks and credit unions across the US what they think about The Clearing House; ask non-EWS shareholder banks their real views on the Zelle platform; ask Robinhood about their situation when NSCC restricted trading during the meme stock frenzy; ask about the conflict between Custodia Bank and the Federal Reserve, or the many grievances fintech companies have with the FedNow instant payment system.
Put yourself in the shoes of a CEO of a high-fee, high-margin payment giant. Your core insight to reach the top is that controlling the network equals controlling everything in the industry, a truth already etched into your bones. Before crypto technology, all global settlement systems were either operated by traditional industry giants or controlled by governments long lobbied by those giants. Now, a public permissionless blockchain appears out of thin air, and smart people in the industry explain to you: this settlement system is not controlled by any single entity; all market participants can use it equally – your core competitors, all startups eyeing your fat margins, can all access it without barriers.
Ask yourself honestly, what choice would you make? Frankly embrace this new technology that would completely dismantle your industry advantage? Or promote a compromised hybrid solution that superficially retains some blockchain characteristics but tightly grips network control and pricing power, then deploy PR teams to weave a narrative around regulatory compliance and preventing illicit transactions for cosmetic beautification?
The answer is self-evident. From this perspective, the seizure scenario I depict is not an extreme power play, but the routine, day-to-day operation of the industry. Commercial enterprises will exhaust all means to seize competitive advantages, and complete control over the settlement channel is the ultimate trump card. As long as a network has vulnerabilities capital can manipulate, enterprises will inevitably attempt to swallow it; for decentralized public chains they cannot control, they will also spread false negative narratives and launch endless lawsuits for all-around suppression.
The True Scheme of Giants: Pseudo-Decentralization is Merely a Short-Term Delay Tactic
But from a long-term perspective, this game of chess ultimately cannot succeed. It's not that corporations are unskilled at such commercial calculations, but that pseudo-decentralized solutions themselves have irreparable flaws: operational efficiency cannot match existing mature traditional financial systems, and the security floor is far below that of truly open and neutral public chains. The encryption modules inside corporate consortium chains are just redundant ornaments; the so-called consensus mechanism is merely a performance for external audiences. These enterprise blockchains are only suitable for venture capital pitches and storytelling at industry forums; deployed in real business environments, they will inevitably collapse comprehensively.
Speculating from a Machiavellian perspective: banks and brokerages deeply invested in consortium chains likely know in their hearts this technology holds no long-term developmental value. If this is indeed the case, their vigorous promotion of various pseudo-crypto solutions is nothing but a meticulously designed delaying tactic, aimed at slowing the adoption rate of decentralized technology and lobbying legislative bodies to erect industry entry barriers. From a human nature angle, it's easy to understand: executives leading such traditional institutions are mostly advanced in age, nearing the end of their careers, needing to protect their accumulated industry prestige while maintaining a comfortable lifestyle.
These delay tactics can only work in the short term. Just as water inevitably flows to the lowest ground, the market will ultimately fully embrace the most decentralized infrastructure. The high profits of centralized systems largely stem from the friction, inefficiency, and delays inherent in traditional business processes – precisely the pain points that emerging decentralized technologies target. This too is a logic of real-world博弈: a fully decentralized settlement system is the most powerful weapon for emerging players unburdened by legacy technology and outdated business models to fight against entrenched industry giants. Coupled with the global public's declining trust in traditional finance and authoritative institutions, the overall process of decentralized technology adoption will only accelerate.
Final Conclusion: Despite Its Flaws, Ethereum Remains the Current Optimal Solution
Water flows downhill; assets in the market will continuously and spontaneously flow towards the most secure underlying infrastructure, a Nash equilibrium formed through multi-party博弈. I persist in being a realist. Decentralized systems like Ethereum indeed have many flaws, with high operational costs to resist capital capture and complex underlying mechanism designs, but compared to the various corporate consortium chains in the current market, they remain the optimal comprehensive solution. Many practitioners harboring idealized visions will ultimately pay a painful price in the harsh reality of the industry.
