R3CEV has published a new report authored by Vitalik Buterin that evaluates the suitability of private or public chain Ethereum to be used by banks involved in blockchain consortiums and other such initiatives.

The public Ethereum blockchain was launched in summer 2015, following a public crowdsale event in August 2014. Since its launch, the platform has seen the emergence of more than 100 applications ranging from financial clearing and settlement to insurance, digital asset issuance, and even non-financial applications in areas including voting and the Internet of things, Buterin noted.

“Ethereum offers a highly generalized platform that allows users to make applications for a very wide variety of use cases with much less effort than it would take to create their own blockchain”, he added.

The platform aims to create a “world computer” – a system which looks and feels to users as much as possible like a computer, while gaining the security, auditability and decentralization benefits of blockchain technology.

Buterin further outlined the areas where Ethereum “makes the most sense”. This include:

• a high degree of future-proofness and ability to quickly add in new functionality, possibly even without the cooperation of the blockchain node operators, is desired,
   
• synergy between large clusters of applications is desired, or
   
• the ability for users to be able to enter into arbitrary programmatic “smart contracts” is useful

He emphasized that the choice of using the Ethereum public and a private or consortium chain essentially depends on the developer and the application. Developers without institutional support have increasingly shown a preference for the public chain, as it offers fewer barriers to entry or hurdles in convincing others to adopt their application. Financial institutions without any such constraints should evaluate both options, Buterin added.

He further suggested that a “safe” strategy in the near term is to try consortium chains with 5-25 nodes (one or several per institution) as their scalability is higher in the near term, easier to authorities on the low-risk nature of a “controlled” system, and access to new features such as EIP 101 and 105 before the public chain.

“[I]n the longer term, the choice of private vs. consortium vs. public will depend on the specific application, and particularly the tradeoff between performance and interoperability”, he added.