{"id":526470,"date":"2022-12-14T01:38:12","date_gmt":"2022-12-13T22:38:12","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/what-goldman-sachs-ceo-misunderstands-about-private-blockchains\/"},"modified":"2022-12-14T01:38:12","modified_gmt":"2022-12-13T22:38:12","slug":"what-goldman-sachs-ceo-misunderstands-about-private-blockchains","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/what-goldman-sachs-ceo-misunderstands-about-private-blockchains\/","title":{"rendered":"# What Goldman Sachs&#8217; CEO misunderstands about private blockchains"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a2571306d356\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a2571306d356\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/what-goldman-sachs-ceo-misunderstands-about-private-blockchains\/#%E2%80%9D_What_Goldman_Sachs_CEO_misunderstands_about_private_blockchains_%E2%80%9C\" >&#8221; What Goldman Sachs&#8217; CEO misunderstands about private blockchains &#8220;<\/a><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9D_What_Goldman_Sachs_CEO_misunderstands_about_private_blockchains_%E2%80%9C\"><\/span>&#8221; What Goldman Sachs&#8217; CEO misunderstands about private blockchains &#8220;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<p><img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMTIvZjc4ZmQ4ODAtMzAwYy00ZDg2LWEwYzUtNzI5YTM4NmIzMjhlLmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-30a6cf80>Only one of the following <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">news<\/a> items is real, but someday, all will sound equally comical.<\/p>\n<p>Headline, 1896:<\/p>\n<p>The owner of Wagoneer &amp; Sons, a leading horse-drawn carriage maker, has announced the adoption of a new machine called the \u201cinternal combustion engine\u201d to improve its manufacturing process. \u201cGas engines are powerful but dangerous,\u201d the owner said. \u201cWe will use them to make better wagons.<\/p>\n<p>Headline, 1918:<\/p>\n<p>The American Association of Candle Makers has announced a new initiative to electrify its wax-making process. It believes that electricity is too dangerous to use for lighting but can be utilized to make cheaper candles.<\/p>\n<p>Headline, 1989:<\/p>\n<p>The United States postal service will adopt a new <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a> called \u201cthe internet\u201d to speed up the sorting and delivery of letters and postcards.<\/p>\n<p>Headline, 2022:<\/p>\n<p>The CEO of a major investment bank argues that blockchain, a technology invented to eliminate legacy inter<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a>ries such as banks, is best used by those intermediaries to incrementally improve their outdated methods. <\/p>\n<p>That final headline is a summary of an op-ed <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.wsj.com\/articles\/blockchain-is-much-more-than-crypto-david-solomon-goldman-sachs-smart-contracts-11670345993\">authored<\/a> by Goldman Sachs CEO David Solomon, who argues that private blockchains deployed by regulated intermediaries are more useful than cryptocurrencies. This is the latest iteration of the \u201cblockchain, not Bitcoin\u201d argument we\u2019ve heard for years. It usually starts with a list of why things like public blockchains or decentralized finance (DeFi) are dangerous and ends with the conclusion that only incumbents should be allowed to use the technology. But that\u2019s not how history works.<\/p>\n<p>Every transformative technology starts out as \u201cinefficient and dangerous.\u201d The earliest automobiles often broke down, and one of the first major uses of electricity was executing prisoners. The people and companies who initially embrace new tech also tend to be suspect. Most car companies that popped up 100 years ago failed, and Thomas Edison used to electrocute animals to make his competitors look bad. But good tech that solves important problems wins anyway. <\/p>\n<p>To be fair, there was a time when I considered private blockchains to be a useful, though insignificant, solution \u2014 not as a substitute to crypto but as a temporary solution that could evolve in parallel. A bank, I would have told you three years ago, could use a private network to reduce internal inefficiencies today while learning how to interact with public ones tomorrow.<\/p>\n<p>But I was wrong. Despite a massive effort, the only thing private chains have achieved so far is impressive headlines followed by even more impressive failures. I can\u2019t find a single instance of a corporate project doing something useful despite hundreds of millions of dollars invested in many. The list of epic failures grows by the week.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Learn from FTX and stop investing in speculation<\/em><\/strong><\/p>\n<p>The first problem with any private network is the bastardization of the point of crypto, which is to eliminate intermediaries like banks and the fees they collect. Take cross-border payments, where multiple correspondent banks have been (supposedly) building private blockchains to improve their internal transfers. The best correspondent bank isn\u2019t a more efficient one \u2014 it\u2019s the one you don\u2019t need thanks to stablecoins.<\/p>\n<p>That\u2019s not to say that banking will go away. Even stablecoins will need someone to hold their reserves, and tokens often need custodians. But the more time big banks waste on their private-chain fantasies, the less likely they are to build useful crypto products.<\/p>\n<p>In his op-ed, Solomon argues that \u201cunder the guidance of a regulated financial institution like ours, blockchain innovations can flourish,\u201d followed by \u201cthe invention of email didn\u2019t make FedEx or UPS obsolete.\u201d This is a false analogy. A better one is the U.S. Postal Service, where mail volume <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/about.usps.com\/who\/profile\/history\/first-class-mail-since-1926.htm\">collapsed<\/a> by 50%. Is Wall Street listening?<\/p>\n<p>The second problem with any private network is the slow pace of development. In DeFi, new protocols are frequently launched by random developers. Most fail (sometimes catastrophically), but thanks to the permissionless nature of public networks, the iteration is instant. That\u2019s how we get generational breakthroughs like Uniswap, built on a $100,000 grant \u2014 less money than the salary of the countless bank executives working on the latest private network fantasy.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>From the NY Times to WaPo, the media is fawning over Bankman-Fried<\/em><\/strong><\/p>\n<p>\u201cBut wait a minute,\u201d bankers like to argue, \u201cwhat about regulations? We can\u2019t just dive head first into DeFi even if we wanted to.\u201d That\u2019s true. But it\u2019s also their problem.<\/p>\n<p>What these executives are really saying is that they expect their regulatory moats to protect them indefinitely. If every DeFi project had to first get a banking license, then the pace of innovation in crypto would slow drastically.<\/p>\n<p>But that\u2019s not how disruption works. By using smart contracts and cryptographically guaranteed outcomes, DeFi will be a lot safer than any bank. By riding a transparent, global public network like Ethereum, it will also be more accessible and fair than any financial system that we have today. Regulators will eventually come around.<\/p>\n<p>It\u2019s hard to know exactly what a public permissionless future would look like, but the one thing we can be sure of is that it won\u2019t look like how Wall Street operates today. That\u2019s not how history works. <\/p>\n<div>\n<div style=\"background: rgb(239, 239, 239); border: 1px solid rgb(204, 204, 204); padding: 10px;\"><strong>Omid Malekan<\/strong> is a nine-year veteran of the crypto industry and an adjunct professor at Columbia Business School, where he lectures on blockchain and crypto. He is the author of <em>Re-Architecting Trust: The Curse of History and the Crypto Cure for Money, Markets, and Platforms<\/em>.<\/div>\n<\/div>\n<p class=\"post-content__disclaimer\"><em>This article is for <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a> information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author\u2019s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.<\/em><\/p>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more News articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/what-goldman-sachs-ceo-misunderstands-about-private-blockchains\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8221; What Goldman Sachs&#8217; CEO misunderstands about private blockchains &#8220; Only one of the following news items is real, but someday, all will sound equally comical. Headline, 1896: The owner of Wagoneer &amp; Sons, a leading horse-drawn carriage maker, has announced the adoption of a new machine called the \u201cinternal combustion engine\u201d to improve its&#8230;<\/p>\n","protected":false},"author":1,"featured_media":526471,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/cdn-cgi\/image\/format=auto,onerror=redirect,quality=90,width=1200\/https:\/\/s3.cointelegraph.com\/uploads\/2022-12\/f78fd880-300c-4d86-a0c5-729a386b328e.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74888,74894,71939,72927,70790,70759,4965,67874,8575],"class_list":["post-526470","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-banking","tag-blockchain","tag-banks","tag-fees","tag-goldman-sachs","tag-tech","tag-technology","tag-united-states","tag-usa"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/526470","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=526470"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/526470\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/526471"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=526470"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=526470"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=526470"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}