tl;dr
Explore how major corporations are building proprietary blockchains to bypass public network limitations, but experts warn these efforts may fail due to centralization. Discover the battle between corporate control and decentralized ideals shaping the future of finance.
**Corporate Blockchains vs. Public Networks: The Future of Finance?**
In the rapidly evolving landscape of blockchain technology, a notable trend has emerged: major corporations such as JP Morgan, Circle, and Stripe are developing their own proprietary blockchains. This move aims to harness their existing customer bases while circumventing the technical limitations of public networks like Bitcoin and Ethereum. However, experts argue that these corporate blockchains may not endure in the long term, as they diverge from the foundational principles of decentralization and disintermediation that define public blockchains.
### The Rise of Corporate Blockchains
The surge in corporate blockchain initiatives is driven by the growing institutional adoption of cryptocurrency. Companies like Circle, Tether, JPMorgan, and even sports giant FIFA are launching their own Layer-1 or Layer-2 blockchain infrastructures. These networks are designed to address the challenges of public blockchains, such as scalability, speed, and security.
A key advantage of corporate blockchains is their ability to leverage existing customer ecosystems. By abstracting the technical complexities of blockchain, companies can onboard users seamlessly, enabling them to engage with the technology without needing deep crypto expertise. For example, Stripe is developing *Tempo*, an EVM-compatible Layer-1 blockchain to streamline global stablecoin payments, while Circle is building *Arc*, a blockchain optimized for stablecoin finance. Similarly, Sony’s *Soneium* and FIFA’s Avalanche-based blockchain aim to integrate gaming, entertainment, and sports ecosystems onto the blockchain.
Omid Malekan, a crypto industry veteran and Columbia Business School professor, highlights that corporations are not just adapting to technological disruption but also seeking to preserve their power and profitability. “They want performative blockchains with unique features for payments, while maintaining control over their ecosystems,” he explains.
### Limitations of Public Blockchains
Despite their promise, public blockchains face significant hurdles. Bitcoin and Ethereum, while pioneers, often struggle with slow transaction speeds, high fees, and scalability issues. Their decentralized nature, while a strength, can also lead to inefficiencies in corporate use cases. For instance, public networks’ volatile economic models and susceptibility to downtime make them less appealing for institutions prioritizing reliability.
This has prompted companies to build private or permissioned blockchains. Google Cloud’s *GCUL* and JPMorgan’s *Kinexys* network exemplify this shift, offering tailored solutions for institutional finance. Meanwhile, Toyota’s *Mobile Orchestration Network* (MON) on Avalanche explores tokenization in mobility services.
### The Fundamental Flaw: Centralization vs. Decentralization
While corporate blockchains offer immediate benefits, experts like Malekan argue they lack the long-term viability of public networks. Public blockchains like Bitcoin and Ethereum are built on principles of neutrality, immutability, and disintermediation—values that corporate blockchains often disregard.
“Corporate blockchains are not neutral and will alienate users, issuers, and developers who don’t trust these entities,” Malekan says. By centralizing control, these networks risk losing the trust of communities that value transparency and autonomy. In contrast, public blockchains function as “immutable protocols” that cannot be altered or manipulated, offering a sense of security and fairness.
### The Inevitable Competition
Malekan predicts that public blockchains will outcompete their corporate counterparts. Bitcoin and Ethereum’s resistance to censorship and their role as “credibly neutral” systems make them attractive to users and developers. As these networks grow, they threaten traditional finance by challenging the dominance of central banks and corporate financial institutions.
“The main challenge for central banks will be decentralized money like Bitcoin or stablecoins,” Malekan notes. The rise of digital currencies could erode the ability of central banks to control monetary policy, as users increasingly adopt alternatives to fiat. Similarly, corporate banks and fintech startups may face pressure to lower fees and improve services in the face of competition from Ethereum’s decentralized infrastructure.
### Conclusion: A Transitional Step, Not a Long-Term Solution
While corporate blockchains represent a strategic move to stay competitive in the crypto space, their reliance on centralization and control may limit their longevity. As Malekan emphasizes, the future of finance lies in protocols that prioritize neutrality and disintermediation. Public blockchains, with their immutable and trustless frameworks, are poised to dominate, leaving corporate initiatives as a necessary but temporary phase in the evolution of blockchain technology.
In the end, the battle between corporate and public blockchains is not just about technology—it’s about values. Will the future of finance be shaped by centralized power or decentralized empowerment? The answer may determine the fate of both systems.