Ethereum is retracing the same path as the Internet and Linux: everyone refuses to yield to anyone else, and in the end, the neutral party takes it all.

Original Author: Etherealize

Original Translation: TechFlow

Introduction: Stripe wants everyone to use Tempo, JPMorgan wants to push its own chain, Circle wants to launch Arc - giants will never build on each other's turf. This is Ethereum's opportunity: when everyone refuses to submit to a single company's infrastructure, the only option is a neutral layer that no one controls.

Ethereum is replaying the history of the internet and Linux.

"Stripe wants everything to happen on Tempo, but JPMorgan wants everything to happen on the JPMorgan chain, Circle wants everything to happen on Arc, and so on. They will never agree. The big players will never agree to build on another big player's infrastructure. That's why Ethereum is the only option. It is the only way forward – as neutral infrastructure that everyone can accept."

In 1995, most of the tech elite were convinced the internet would lose to proprietary corporate networks. They were wrong, and today's critics of Ethereum are likely making a similar mistake for analogous reasons. The most famous example is Bill Gates, who predicted in his book *The Road Ahead* that the future of digital commerce would run not on the open internet, but on proprietary networks owned by companies like Microsoft and Oracle. This was the consensus. As a16z co-founder Ben Horowitz wrote, "Almost no one thought the internet would have a major impact outside of the scientific community – least of all the most important tech industry leaders who were busy building proprietary alternatives." The same thing happened to Linux. Throughout the late 1990s, Sun Microsystems dominated the high-end Unix server market, but by the early 2000s, it had lost most of that business to open-source Linux running on cheap commodity hardware.

The same pattern is playing out today in financial infrastructure. Perceiving both opportunity and threat, enterprises are racing to build proprietary blockchains within their own controlled walled gardens. For a while, the proprietary versions look like they are winning – they are faster, have better user experience, and boast massive business development teams. Then they are slowly consumed by an open, credibly neutral alternative, because no company can keep up with permissionless innovation forever, and no serious participant will build on infrastructure controlled by a competitor.

In his 1997 essay *The Cathedral and the Bazaar*, Linux contributor Eric Raymond attempted to explain why open, permissionless infrastructure often prevails in the long run. Since Fred Brooks' *The Mythical Man-Month*, the established wisdom was that software must be built by small, tightly managed teams under a single architect, because communication costs grow quadratically. Yet, Raymond saw thousands of contributors (most of whom had never met) working simultaneously on different parts of the Linux kernel, surpassing multi-billion dollar companies. If traditional software was like a meticulously crafted "cathedral," then the "bazaar" was Raymond's description of the chaotic, public, distributed development model Linus Torvalds stumbled upon – releasing the kernel source code for free and accepting patches from anyone willing to submit them. The guiding philosophy, in Raymond's words, was "release early, release often, and delegate everything you can, be open to the point of promiscuity," which produced an operating system running most of the internet by the early 2000s.

Raymond's explanation was that the bazaar avoided the quadratic communication cost problem because contributors did not coordinate directly with each other. They coordinated with the codebase through patches and releases, with maintainers integrating their work into the medium against which everyone coordinated. As he put it, "The principle behind Brooks's Law is not repealed, but its effects can be swamped by other nonlinear factors given a large pool of developers and cheap communications."

Another mechanism Raymond identified was that the bazaar eliminated the distinction between users and developers. In a cathedral, users are customers who report bugs to a help desk. In a bazaar, users are co-developers who report bugs by fixing them, or by describing them with enough technical detail for someone else to fix. Raymond explained that in open-source communities, "every problem is transparent to someone." Collective collaboration surpasses any centralized competitor:

"The Linux world behaves in many respects like a free market or an ecology, a collection of selfish agents attempting to maximize utility, a process which produces a self-correcting spontaneous order more elaborate and efficient than any amount of central planning could achieve."

You can see this on Ethereum. Fabian Vogelsteller wrote the ERC-20 standard, now used by every stablecoin, because he was building a wallet and found no clean way to support tokens – each token had a different interface. The ERC-721 standard for NFTs came from the people who made CryptoKitties. Uniswap, now the largest exchange of its kind globally, originated from a blog post by Vitalik Buterin and was built by Hayden Adams, a mechanical engineer with no finance background. None of them needed permission to improve the network. As Sun Microsystems co-founder Bill Joy said, "No matter who you are, most of the smartest people work for someone else," and in a permissionless system, innovation can come from anywhere.

The difference between the bazaar and the cathedral is that the bazaar's integration layer is thin, public, and based on trustworthiness rather than authority. Coordinators like Linus Torvalds or Vitalik Buterin lead because contributors choose to follow, and contributors choose to follow because the coordinator's decisions can be inspected, criticized, and forked if necessary. The internet has thin centralized integration in the form of the IETF and IANA. Wikipedia has its editorial process. Every project that derives sustained advantage from permissionless innovation combines genuinely open contribution with structured integration that prevents the chaos critics fear. And the integration layer must operate through trustworthiness, not coercion, or it fails.

The bazaar also requires a foundation that no one can capture. If Torvalds attempted to privatize the kernel, contributors would fork the project and continue elsewhere. Raymond developed this idea in *Homesteading the Noosphere*, arguing that open source had developed property rights akin to Locke's theory of land ownership: developers establish ownership by being the first to pioneer a project (writing the initial code), maintain ownership through ongoing contribution, and can transfer ownership through legitimate inheritance. Open licenses are the formal mechanism for credibility, and the norms of the internet wilderness are the social mechanism. Remove either one, and contributors will go work elsewhere, where their contributions cannot be appropriated.

In the Ethereum community, Vitalik Buterin formalized this requirement as "credible neutrality." A coordination mechanism is credibly neutral when its rules are transparent, apply equally to all participants, are difficult to change, and participation is open to anyone willing to follow the rules. These four attributes are extracted from systems that successfully attract large-scale contribution. The internet, Linux, and Wikipedia all possess versions of these four attributes. Proprietary networks, walled gardens, and enterprise blockchains do not.

Over a sufficiently long time horizon, credibly neutral systems typically win. Open networks replaced proprietary ones; Linux replaced proprietary Unix; Wikipedia replaced Encarta and the Encyclopaedia Britannica. Each time, the proprietary alternatives had real advantages – focused products, more capital, customer support teams, professional marketing and business development teams – and each time, these advantages eroded as the open ecosystem matured and network effects reversed. Once the open alternative crosses the threshold in accumulated contributions, tools, and the credibility of not changing the rules, the closed system can hardly compete.

The same pattern is now playing out across every layer of financial infrastructure. SWIFT, Visa, and Mastercard, and the consortium chains being pitched to institutions today are different products with different histories, but they are structurally the same bet: centrally controlled infrastructure with a potential landlord. For forty years, SWIFT was a neutral pipeline owned by its member banks, until the US pressured it to cut off Iranian banks in 2012 and several Russian banks in 2022. Despite corporate governance and a Belgian charter, SWIFT ultimately answered to the US, and the rest of the world noticed. China accelerated CIPS, Russia built SPFS, India expanded UPI, and Brazil's Pix became the backbone of BRICS Pay. Visa and Mastercard also started as bank cooperatives before becoming tollbooths charging merchants 1.5-3.5% transaction fees. The consortium chains now being pitched (like Canton, Tempo, Arc) carry the same flaw: a landlord whose interests may diverge from those building on top.

"The original vision of consortium blockchains – 5 banks or big companies getting together to create their own chain – basically failed," Vitalik Buterin explained. "It ends up inheriting most of the disadvantages of centralization and most of the disadvantages of decentralization simultaneously." As he described, the problem is that the first few banks feel like equal founders, but the twentieth bank is just joining something already controlled by competitors. You assume all the engineering costs of a distributed system without reaping the benefits of openness, composability, and credible neutrality – the very reasons blockchains are worth doing in the first place.

The wreckage confirms his claim. Between 2017 and 2019, several major banking consortia set out to rebuild trade finance on blockchain. We.trade, backed by over a dozen banks including HSBC and Deutsche Bank, went bankrupt in 2022. Marco Polo signed up over thirty banks and collapsed into liquidation a year later. Contour shut down a few months after. The Australian Securities Exchange spent six years and approximately 250 million AUD on a permissioned ledger built by Digital Asset (the company behind Canton now), abandoning the project in 2022. Meanwhile, the uncontrolled Ethereum has never gone down in its 10+ year history, only grown.

This is why developers choose Ethereum. According to Electric Capital, over a million developers have contributed to the Ethereum ecosystem over its lifetime, with approximately 232,000 active developers in just the past year. No other chain comes close. Partly it is the standard flywheel effect: tools, standards, and jobs are on Ethereum, so people learn to build there, which attracts more tools and jobs. But developers and institutions also choose Ethereum specifically for its superior decentralization and credible neutrality. For instance, last year Robinhood chose to build its L2 on Ethereum instead of its own L1; Johann Kerbrat, the company's head of crypto business, explained the reasoning:

"You see a lot of companies now building their own L1s. We were excited about the idea of controlling everything you want to build, but creating a real, proper, decentralized chain is extremely difficult security-wise, and Ethereum basically gives you that for free. When you look at some of the new L1s being created, they aren't really decentralized, and they aren't really secure. At the end of the day, it's basically just a fancy database that's a bit slower than an actual database, so we really don't see the value in it."

Erik Voorhees, founder of Venice AI (a privacy-first AI inference platform with over 3 million users and tens of millions of dollars in ARR), articulated a similar rationale a few days ago. When asked why Venice was built on Coinbase's Ethereum L2 Base, Erik replied, "It wasn't even a question for us. The Ethereum ecosystem is the more authentic, more resilient, more robust ecosystem among all smart contract platforms."

The most important property of a blockchain is sovereignty. Bitcoin was revolutionary because it was the world's first sovereign computer platform. Before Bitcoin, all computer platforms belonged to individuals, companies, or governments, and had to submit to the will of their owners and the rules of their jurisdictions. But sovereignty submits only to its own rules; no single entity can impose rules on Bitcoin. Kings and queens were once sovereign, then nation-states, and now, for the first time, a computer platform can be sovereign. This is why decentralization is so revered in crypto; it is the means of achieving sovereignty. A platform with ten validators submits to the rules of those ten validators. But a platform like Ethereum, with hundreds of thousands of independent validators distributed across every major jurisdiction, multiple independent client implementations, and a foundation that explicitly renounces governance power, has crossed a threshold where no single party can credibly claim ownership. Sovereignty is the property that allows the global financial system to be built on Ethereum without any participant worrying that another participant, government, or foundation will change the rules to its detriment.

Ethereum's lead in sovereignty and credible neutrality comes largely from path dependencies that other blockchains cannot replicate. Ethereum launched with PoW in 2015, ran for seven years, and transitioned to PoS in 2022. During this period, network ownership was distributed through a public crowdfunding in 2014 and GPU mining deliberately kept accessible to consumer-grade hardware. The result was a broad token distribution, with no single entity controlling a meaningful share of the network (a key factor for sovereignty in a PoS network). Modern consortium chain launches are venture capital funded with concentrated insider allocations, giving a few participants outsized control over the chain's consensus. Competitors can replicate the architecture, but they cannot replicate the history.

Since then, Ethereum's lead has only grown. The platform's sovereignty and credible neutrality attract developers. Developers attract more developers because the libraries, tools, and hiring pools already on Ethereum make building there easier than anywhere else. Applications attract liquidity and tokenized assets, which in turn attract institutions. Each layer reinforces the others, and competitors trying to enter must build all layers at once, while Ethereum continues to compound its growth.

The most sophisticated participants in the space have already chosen Ethereum. Coinbase and Robinhood chose Ethereum for their L2s. BlackRock and JPMorgan launched their tokenized money market funds BUIDL and MONY on Ethereum. Major DeFi protocols, including Aave, Maker/Sky, Maple, and Uniswap, are primarily on Ethereum. The largest stablecoin issuers settle on Ethereum. According to Token Terminal's Q1 2026 Ethereum report, Ethereum holds 79% of active DeFi loans, 62% of stablecoins, 73% of tokenized funds, and 84% of tokenized commodities across the top five chains.

Applications are also permissionless, further reinforcing Ethereum's advantage. For example, Uniswap's permissionless listing process allows thousands of long-tail assets to find price discovery and liquidity that no centralized exchange would provide. Aave's lending markets are open and composable, enabling an entire ecosystem of specialized vaults and risk managers to emerge atop its liquidity, extending Aave's reach far beyond what the core team could build alone. Closed systems require gatekeepers to anticipate every use case in advance; open systems do not.

The strongest objection to the "permissionless wins" thesis is not technical; it is that finance might be the one place where enterprise-owned networks are a feature, not a bug. When a payment fails or an asset ends up in the wrong place, regulators want someone to be responsible. When the lawyers show up, "nobody is responsible" sounds less like an advantage and more like a liability. But this objection conflates two things that exist at different layers. Accountability exists at the application layer, not the settlement layer. For example, token standards like ERC-3643 embed KYC, identity verification, and jurisdictional transfer restrictions directly into the token's smart contract, enabling issuers to whitelist wallets, restrict transfers, and freeze or claw back assets. Privacy works the same way; zero-knowledge cryptography allows institutions to settle on a public chain while keeping transaction details confidential. On a consortium chain, the only ones who can see your data are you and your closest competitors.

Early on, the internet was deemed too insecure for real business. Then HTTPS made the open network secure enough that virtually all commerce moved there, and the question stopped being asked. Skeptics were not wrong in their assessment of the early state. They were simply wrong to believe the open network couldn't close the gap.

The banks and fintech companies building their own chains now hold the same idea as AOL and Microsoft did in the early days of the internet: build something open, but inside your own walled garden so you can collect rent. But it never works, because the wall that gives you control is the same wall that blocks innovation.

The better model is Netscape. Netscape did not try to own the network; it built the browser that brought the world onto it. Riding the explosion of the open web, it became, for a time, one of the most important companies of its era. Ethereum's credible neutrality, nearly impossible to replicate, has positioned it to become the settlement layer for global finance. The winning strategy is to build on top of permissionless infrastructure, not against it.

Disclosure: This analysis is published by Etherealize, an organization focused on institutional Ethereum adoption. The author and Etherealize may hold positions in ETH and other digital assets discussed. This is not investment advice.