CEO of Abra says Permissioned Blockchain will fail

In an interview with Fortune's Balancing the Ledger episode, The chief executive of Abra a Bitcoin-based app that lets people buy and sell currencies, virtual coins, and Nasdaq-listed stocks, expects corporate adaptions of the technology behind cryptocurrency to amount to little, “We went through this craziness in the late ’90s where for about a year and a half everyone was talking about this term ‘extranet, It’s exactly what’s happened with all this enterprise blockchain nonsense.”

A former Goldman Sachs analyst, Barhydt threw cold water on another Wall Street bank’s recently unveiled cryptocurrency project too. He said he sees little of value in JPMorgan Chase’s debut of JPM Coin, a virtual currency designed for the bank’s institutional customers to make payments, and that the technology is likely to be “a complete waste of time.” 

“Just like people realized extranet was a waste of time, it was all about the Internet,” Barhydt said.

Proponents of enterprise blockchains like to point out that free-for-all cryptocurrency networks, like Bitcoin and Ethereum, face tremendous challenges in scaling up. They say these networks may never be able to handle the transaction processing demonstrated by private networks.

Barhydt isn’t persuaded by this line. He points to Robert Metcalfe, the creator of Ethernet—a technology known for knitting local area networks—who once predicted that the Internet would “go spectacularly supernova” in 1996, imploding thanks to an influx of traffic.

“Well, that was obviously wrong,” Barhydt says. The same will hold true of Bitcoin, he adds.