Bitcoin[1] (BTC) developer Jimmy Song[2] stated that using blockchain[3] tech for a private, centralized system, such as an enterprise, ‘makes zero sense’ in an interview[4] with Laura Shin[5] June 26.
Song, also a venture partner at Blockchain Capital, spoke on the podcast Unchained about his work as an architect on an enterprise private blockchain at Paxos[6] for two years, noting that he “couldn’t” 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.”
Song then explained the difference between a federated system for blockchain, mentioning Blockstream[7], as well as other enterprise private blockchains like IBM’s Hyperledger[8] and Corda[9]. In Song’s words, there are two problems that prevent the technology from working: “the oracle problem [and] the regulator problem.”
Song explains how the “oracle problem” comes up when you bind 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 refers to involves the need for a regulator to have “direct access” to a blockchain, specifically a private federated chain.
Song then uses the Hyperledger platform as an example of the centralization issue, explaining how their “ordering service” is really a
