Owen Jelf and Sigrid Seibold of Accenture, a Fortune 500 banking services company, have proposed the creation of a closed blockchain to gain the benefits and avoid the issues associated with Bitcoin.
Jeff and Seibold view Bitcoin as problematic due to the public nature of the ledger, the amount of money it takes to secure the network, and the amount of time for transactions to validate. A closed system that would only allow pre-approved participants to run nodes on the system, likely other large institutions, would allow for near-instant settlement and record keeping while avoiding the messy, anarchic nature of Bitcoin.
The buzz coming out of banks and some of the more government cozy Bitcoin companies in the past few months has been that the blockchain is revolutionary, but there is no real need for Bitcoin. There’s no doubt that the banking sector could set up its own, proprietary blockchain and then make everyone interested in using their services use it. There is also no doubt that this would likely help banks become more efficient and economize in many ways. So, kudos to them.
The point that gets missed in all of this is that the blockchain was not created as a way to help banks become bigger and better, but as a way to cut banks out of the deal. If someone uses an Accenture blockchain, they will be subject to fees, conditions, penalties, and a myriad of other bank and governmental rules and regulations. If someone uses Bitcoin, they will hold and be responsible for their own money. No penalties, haircuts, seizures, capital controls or the like will apply.
In the wake of the financial crisis of 2008, and watching the travesty in Greece unfold with more countries around the world seemingly teetering toward the same fate, it seems certain that there is going to be more banking chaos in the coming years. Bitcoin is now starting to hit its stride in terms of infrastructure and security and will only get stronger in the coming months. Greece didn’t push Bitcoin to the moon, and the next crisis might not either. But with each crisis, and with each imposition of haircuts and capital controls, more and more people are going to start wondering how they can secure their wealth.
It will only take one instance of Bitcoin really taking off and showing people how they can achieve real financial independence and these walled gardens that Jeff and Seibold dream of will simply vanish as a footnote of history.