Bitcoin is one of the very few successful products of the blockchain technology despite being around for more than 8 years. Other major crypto-networks like Ethereum are performing quite well, but from security and reliability standpoints, their long term growth is difficult to speculate.
Banks and financial institutions have popularized this theory of “private blockchains,” which they believe is key to revolutionizing and optimizing banking operations, because these blockchains can settle smart contracts, cross-border transactions, cross-institutional payments, with low costs and flexibility.
However, in any industry, a smarter and more intelligent method of replicating the success of a company, product, or an individual is to analyze their advantages and various factors that have contributed to their success. In the case of bitcoin, these factors are: decentralization, open source community, immutability, and cautious approach to development.
Understanding that decentralization of bitcoin renders the network immutable and unalterable, what would happen if one was to centralize a blockchain network? It would no longer become unalterable and immutable. It would become highly vulnerable and hackable, like normal databases and servers.
In theory, a private blockchain is literally a block of information stored in a chain. Although it has transformed into this mythical, mysterious, and magical technology, it really is nothing more than a federated database without proper security measures and immutability.
Thus, it is simple to realize the consequences of removing irrefutability of a blockchain network. When blockchain networks become private networks, they become centralized and centralized networks are breachable, hackable, and breakable.
To date, banks and financial institutions have spent over US$1.5 billion and continues to inject US$400 million annually in trying to integrate and implement this magical technology. However, with all this capital and top talents in place, one question remains unsolved. That is, are private blockchains actually applicable?
At first, banks completely denied the concept of digital currencies and networks. Now, they have begun to create their replica of bitcoin, which is much more vulnerable, inefficient, and inapplicable. Ultimately, when banks realize the virtual insanity in fighting against logic, they will be left with no other option but to embrace and support bitcoin.