In an interview, Jimmy Song – the Bitcoin (BTC) developer as well as a venture partner at Blockchain Capital – proclaimed that using blockchain tech for a private, centralized system, such as an enterprise, makes no sense at all.
For two years, Song has worked as an architect on an enterprise private blockchain at Paxos. Now, he expressed his thoughts on the podcast Unchained, remarking that he could not make a private blockchain work:
“Every single time I came back to the same thing, you have to have some central point of failure, in which case a blockchain makes zero sense […] I tried so hard […] to make that work, and I couldn’t find the way to do it without centralizing a large part of it, at which point it kind of becomes pointless.”
The contrast between a federated system for blockchain was explained, citing Blockstream, as well as other enterprises private blockchains like IBM’s Hyperledger and Corda.
Two problems that prevent the technology from working, in Song’s words: “the oracle problem [and] the regulator problem.”
The “oracle problem” occurs when you unite a real-world asset to the blockchain:
“Once you do that, then you lose a lot of the protections that you get from say, the gold bar being in the vault. Say, if somebody steals that token, who does that gold bar belong to?”
The “regulator problem” Song is pointing out includes the need for a regulator to have “direct access” to a blockchain, especially a private federated chain.
Joseph Lubin, the co-founder of Ethereum (ETH), bet any amount of Bitcoin that Song is mistaken that most blockchain-based projects will be out-of-date in five years.
Recently, Song declared an initiative created to educate and compensate Bitcoin developers in February.