Wall Street's closed blockchains are a "race to the bottom": Etherealize's head explained why consortiums are doomed.
In recent months, we have witnessed a strange renaissance: the largest banks and fintech giants are once again turning to closed blockchain networks with restricted access. However, this trend has an influential critic. Vivek Raman, CEO of Etherealize, has called this trend nothing less than a "race to the bottom," and his arguments deserve close attention.
Fragmentation Instead of Innovation
In my firm conviction, Raman is absolutely right in his assessment. The consortium networks that Wall Street is now actively promoting do not simply return us to the past—they destroy the very essence of distributed ledger technology. Instead of a single global space, we get fragmented "digital reservations" that do not interact with one another.
The key issue the head of Etherealize raises is the fragmentation of liquidity. When each bank or group of banks creates its own closed ecosystem, we lose the two main advantages of blockchain: system interoperability and capital concentration. Essentially, this is a return to isolated back offices, only with more expensive technological underpinnings.
An Architectural Mistake
Raman proposes a fundamentally different approach: use open Ethereum as the base layer, and implement privacy and access control at the upper levels—through L2 solutions or application-level protocols. His analogy with HTTP and HTTPS here is very apt. No one builds a "closed internet" for banking transactions—everyone uses open standards with encryption on top.
Recent examples—Canton Network from Digital Asset, the Arc project from Circle, and Tempo from Stripe—Raman rightly calls "consortium chains 2.0." And history here repeats itself with alarming precision. We already saw this with R3 and Hyperledger in 2016: loud promises, pilot projects, and... quiet oblivion. Closed networks die because they contradict the network effect, which is the main driver of value in the crypto industry.
"We firmly believe and have always held this position that a global, open permissionless infrastructure is necessary as the base layer," Raman emphasizes. And this is not just rhetoric: in June, he already stated that traditional financial organizations had begun moving from experiments with Ethereum to real implementation in business processes.
My conclusion as an analyst: closed blockchains are a dead-end branch of evolution. They may provide short-term comfort to regulators and compliance departments, but in the long run, they will lose to open networks. The market is already voting for interoperability, and banks should heed this signal before they spend billions on yet another "digital fortress" that will become obsolete before it even launches.