The ethereum network could pose a real challenge to large financial institutions like Visa as soon as next year, according to Vitalik Buterin, the creator of the ethereum blockchain.
In a Q&A with AngelList founder Naval Ravikant at TechCrunch Disrupt on Monday, Buterin said that security is the biggest challenge to bringing blockchain technologies into the mainstream, and that once it’s sorted out, blockchain tech could steal business or even replace financial institutions like Visa in a “couple of years.”
Despite the hype around blockchain, most of the current applications that use the technology aren’t far enough along in development to be used widely, he said.But Buterin said that while he expects low-security prototypes to be introduced in the financial space by next year, it will be a few years before they have any weight.
Blockchain technologies like Ethereum are widely believed to be the next big disrupter for industries ranging from law to shipping.
Often described as smart contracts, the technology uses a decentralized computer network to send messages which create a universally accessible ledger that can’t be edited or modified. Theoretically, with blockchain technology, business and legal transactions can be executed with a lower risk of fraud.
While Buterin was optimistic about the role Ethereum could play in replacing Visa, he was less certain about its impact on cloud computing giants like Amazon Web Services (AWS). AWS sells space on Amazon servers to third party websites like Netflix, which host vast amounts of data on AWS servers.
To disrupt the cloud industry, applications running on the Ethereum network would have to convince private companies that its decentralized structure is secure enough to host proprietary or otherwise sensitive content. Buterin doesn’t see that happening anytime soon.
“In general, there’s always going to be this large set of applications where decentralized approaches don’t work that well,” Buterin said.