Ethereum is retreading the old path of the internet and Linux: when everyone refuses to submit to another's infrastructure, the only choice is a neutral layer that no one controls.

Original Author: Etherealize

Original Compilation: TechFlow

Overview: Stripe wants everyone to use Tempo, JPMorgan wants to push its own chain, and Circle wants to launch Arc — giants will never build on each other's turf. This is Ethereum's opportunity: when everyone refuses to bow to a single company's infrastructure, the only option is a neutral layer that nobody 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, and Circle wants everything to happen on Arc, so on and so forth. 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 those criticizing Ethereum today are likely to err for similar reasons. The most famous example is Bill Gates, who predicted in his book *The Road Ahead* that the future of digital commerce would not run 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 nobody thought the Internet would have a major impact outside the scientific community — least of all the most important tech industry leaders who were busy building proprietary alternatives." Linux experienced the same thing. Throughout the late 1990s, Sun Microsystems dominated the high-end Unix server market, but by the early 2000s, it lost most of that business to open-source Linux running on cheap, general-purpose hardware.

The same pattern is unfolding today in financial infrastructure. Enterprises perceive opportunities and threats, racing to build their own proprietary blockchains within their controlled walls. For a while, the proprietary versions seem to be winning — they are faster, have better user experiences, and boast massive business development teams. Then they are slowly consumed by an open, credibly neutral alternative, because no company can forever keep pace with permissionless innovation, 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 sought to explain why open, permissionless infrastructure often prevails in the long run. Since Fred Brooks' *The Mythical Man-Month*, the accepted 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 carefully crafted like a "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, delegate everything you can, be open to the point of promiscuity," which produced an operating system running most of the web by the early 2000s.

Raymond's explanation was that the bazaar avoided the quadratic communication cost problem because contributors didn't coordinate directly with each other. They coordinated with the codebase through patches and releases, with maintainers integrating their work into a medium everyone uses to coordinate. As he put it, "The principle behind Brooks's Law is not abolished, but its effects can be swamped with other non-linear factors given a large number of developers and cheap communications."

Another mechanism Raymond identified was that the bazaar eliminated the distinction between users and developers. In the cathedral, users were customers reporting bugs to a help desk. In the bazaar, users were co-developers who reported bugs by fixing them, or described them in enough technical detail for someone else to fix. Raymond explained that in the open-source community, "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, which produces a self-correcting spontaneous order more refined and efficient than any kind of central planning."

You can see this on Ethereum. Fabian Vogelsteller wrote the ERC-20 standard, now used by every stablecoin, because while building a wallet, he 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 is now the world's largest exchange of its kind, originating from a blog post by Vitalik Buterin and 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 credibility 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 examined, 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 has gained a sustained advantage from permissionless innovation combines truly open contribution with structured integration, preventing the chaos critics fear. And the integration layer must operate through credibility, not coercion, or it fails.

The bazaar also requires a foundation that no one can capture. If Torvalds tried 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 continuous contribution, and can transfer ownership through legitimate inheritance. The credibility of open licenses is the formal mechanism; the norms of the noosphere are the social mechanism. Remove either, and contributors will go work elsewhere, where their contributions will not be appropriated.

In the Ethereum community, Vitalik Buterin formalized this requirement as "credible neutrality." When rules are transparent, apply equally to all participants, are difficult to change, and participation is open to anyone willing to abide by them, a coordination mechanism is credibly neutral. These four attributes are extracted from systems that have attracted contributions at scale. The Internet, Linux, and Wikipedia all have versions of these four attributes. Proprietary networks, walled gardens, and enterprise blockchains do not.

Over a sufficiently long time horizon, credibly neutral systems tend to win. Open networks replaced proprietary ones; Linux replaced proprietary Unix; Wikipedia replaced Encarta and Encyclopedia Britannica. Each time, the proprietary alternatives had genuine 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 crossed the threshold in accumulated contributions, tools, and the credibility of not changing the rules, the closed system had almost no chance to compete.

The same pattern is now playing out at every layer of financial infrastructure. SWIFT, Visa and Mastercard, and the consortium chains being marketed 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 answers to the US, and the rest of the world took note. China accelerated CIPS, Russia built SPFS, India expanded UPI, Brazil's Pix became a pillar of BRICS Pay. Visa and Mastercard also started as bank cooperatives but became toll booths 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 of it.

"The original vision of consortium blockchains — 5 banks or big companies coming together to create their own chain — has basically failed," Vitalik Buterin explained. "It ends up inheriting most of the disadvantages of centralization and most of the disadvantages of decentralization at the same time." As he describes it, 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 bear 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 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 about AUD 250 million on a permissioned ledger built by Digital Asset (the company behind Canton now), abandoning the project in 2022. Meanwhile, Ethereum, controlled by no one, has never gone down in its 10+ year history, only grown.

This is why developers choose Ethereum. According to Electric Capital, over one million developers have contributed to the Ethereum ecosystem over its lifetime, with approximately 232,000 active developers in the past year alone. No other chain comes close. Part of it is the usual flywheel effect: tools, standards, and job opportunities are all 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 rather than its own L1; Johann Kerbrat, the company's head of crypto, explained the rationale:

"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 truly, properly decentralized chain is extremely difficult in terms of security, and Ethereum basically gives you that for free. When you look at some of the new L1s being created, they are not truly decentralized, they are not truly secure. At the end of the day, it's basically just a fancy database that is 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 in ARR), laid out a similar rationale a few days ago. When asked why Venice was built on Coinbase's Ethereum L2 Base, Erik replied: "It was not even a question for us. The Ethereum ecosystem is the more real, more resilient, more powerful ecosystem among all smart contract platforms."

The most important blockchain attribute 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 obey the will of their owner and the rules of their jurisdiction. But sovereignty obeys only 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 valued in crypto; it is the means to achieve sovereignty. A platform with ten validators obeys 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 has explicitly renounced governance authority, has crossed a threshold where no single party can credibly claim ownership. Sovereignty is what 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 disadvantage.

Ethereum's lead in sovereignty and credible neutrality largely comes from path dependence that other blockchains cannot replicate. Ethereum launched with PoW in 2015, operated for seven years, and transitioned to PoS in 2022. During this period, network ownership was distributed through a public crowdsale 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 PoS networks). Modern consortium chain launches are venture capital rounds with concentrated insider allocations, giving a few participants outsized control over the chain's consensus. Competitors can copy the architecture, but they cannot copy the history.

Since then, Ethereum's lead has only increased. 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 predominantly 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 strengthening 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 offer. Aave's lending markets are open and composable, enabling an entire ecosystem of specialized vaults and risk managers to emerge on top of its liquidity, extending Aave's reach far beyond what a core team could build alone. Closed systems require gatekeepers to anticipate every use case in advance, but open systems do not.

The strongest objection to the "permissionless wins" thesis is not technical; it is that finance might be the one area where corporate-owned networks are a feature, not a bug. When a payment fails or an asset ends up somewhere it shouldn't, regulators want someone to hold accountable. When lawyers show up, "nobody is accountable" sounds less like a virtue and more like a liability. But this objection confuses two things that exist at different layers. Accountability resides at the application layer, not the settlement layer. For instance, token standards like ERC-3643 embed KYC, identity verification, and jurisdictional transfer restrictions directly into the token's smart contract, so issuers can whitelist wallets, restrict transfers, and freeze or reclaim 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 see your data are you and your closest competitors.

Early on, the Internet was deemed too insecure for real commerce. Then HTTPS made the open network secure enough that virtually all commerce moved there, and the question was never raised again. Skeptics weren't wrong about the early state; they were simply wrong to assume the open network couldn't close the gap.

Banks and fintech companies now building their own chains have the same idea AOL and Microsoft had in the early days of the Internet: build something open, but within your own walled garden so you can collect rent. But this never works, because the walls that give you control are the same walls that block innovation.

The better model is Netscape. Netscape didn't try to own the network; it built the browser that brought the world to it. Riding the explosion of the open web, it briefly became one of the most important companies of its era. Ethereum's credible neutrality is nearly impossible to replicate, and it is already positioned to become the settlement layer for global finance. The winning strategy is to build on permissionless infrastructure, not compete with 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.