The annual event known as Ethereum Denver returned last week, as a tribe of crypto faithful descended upon the rodeo grounds of Colorado’s largest city to geek out about the world’s second most popular blockchain. Unlike the noisy religious revival feel of Bitcoin gatherings, the vibe at Ethereum events is more akin to a tech-infused folk festival. This year’s conference was subdued compared to previous ones that coincided with to-the-moon market rallies but, contrary to the
image of a forsaken hellscape tweeted by digital artist Beeple, it had plenty of energy and some heavy hitters—SEC Chair Paul Atkins among them.
This edition of Ethereum Denver also comes at a time when the blockchain is trying to show it can cut it in the world of traditional finance. While Ethereum has been integral to many blockchain trials by big banks, Wall Street has repeatedly tried to develop its own alternatives—ones with fewer ties to the traditional crypto community. And in recent months, it has been trying to do so again.
This is reflected in a debate that has
flared up over
privacy on the blockchain and led
JPMorgan Chase,
Visa and other big financial incumbents to experiment with Canton, a blockchain not built on Ethereum. The crypto community, meanwhile, sees a different privacy tool called ZKsync, which sits on Ethereum architecture, as the better choice.
On its face, it feels like the decision by big banks to opt for Canton, which can be described as kind-of-a-blockchain, means Ethereum could get frozen out of the current push by Wall Street to upgrade its backend to digital ledgers. But history shows this is unlikely to be the case.
A decade ago, during a previous crypto downturn, the media made a big deal about an outfit called R3 that was backed by a consortium of banks, and that liked to embrace the slogan “blockchain not Bitcoin.” The premise was to create a walled-garden version of crypto that would let individual banks have considerable control over its operations. Unsurprisingly, the project has been mostly a failure.
More broadly, debates over private and public versions of new technology amount to a choice between open and closed systems—and history shows open systems win in the long run. Some famous examples include cable giant Time Warner’s failed attempt to sell the internet as a bundle of TV channels, or Microsoft’s long-running but futile attempt to suppress Linux. This sort of dynamic is likely to play out again when it comes to blockchain. The reality is that, whatever version of blockchain the traditional financial sector builds, the product is likely to be less secure and, in the long run, less popular.
Bank-built blockchains will also find it hard to attract top builders. I was reminded of this during an on-stage chat I had last week in Denver with Danny Ryan, a prominent early Ethereum figure who has a computer science degree from Princeton. Ryan is currently at a firm he cofounded called
Etherealize, which seeks to bring Ethereum tools to Wall Street, and whose CEO Vivek Raman spent his career at firms like UBS and
Morgan Stanley. It is rare to find duos like that building tech for banking consortiums—another reason the traditional financial industry will be hard pressed to build alternatives to Ethereum.
Jeff John Roberts jeff.roberts@fortune.com@jeffjohnroberts 
