Ethereum Cofounder Says Blockchain Presents 'Governance Crisis'

Robert Hackett

Charles Hoskinson believes blockchains are ushering in a new era for both business and government administration, one defined by a peculiarly unprecedented quality: leaderless-ness.

The cofounder of the Ethereum and Cardano blockchains, two of the world’s most popular cryptocurrency networks, dropped by Fortune’s Balancing The Ledger studio to voice his concerns about his peers venturing into this uncharted territory, which is ruled “as a cooperative or as a bottom-up community,” as he says, rather than by “a president or king or committee or group that we’ve endowed with special powers.”

The new paradigm presents novel challenges. “We really do have a governance crisis,” says Hoskinson, who is also chief executive of IOHK, a blockchain consultancy and research firm based in Hong Kong.

“This is the first time ever where we’re flirting with the idea of a corporation without a CEO or a country without a president,” Hoskinson continues. “That is a very big challenge and it’s something I think will consume the majority of the 21st century for the cryptocurrency space.”

Hoskinson, who was booted from the Ethereum project in 2014 after a disagreement over the organization’s direction in its earliest days, has had a hand in several prominent, rival blockchain projects since then. In addition to creating Cardano and advising the group behind ZenCash, a so-called privacy coin, Hoskinson became a vocal proponent of Ethereum Classic, a competitor to—and thorn in the side of—the Ethereum project.

Hoskinson continues to clash with his former business associates, including Vitalik Buterin, Ethereum’s creator. In the interview with Fortune, Hoskinson sniped at his erstwhile partners, criticizing an attitude he terms the “lone samurai viewpoint,” wherein “one brilliant founder, whether it be Dan [Larimer, cofounder of the EOS blockchain project] or Vitalik will lead a small group of crack engineers to somehow innovate and solve a big problem. Nothing gets done that way.”

Despite this jab, Hoskinson says he views collaboration and cooperation as keys to success. The stance informs his outlook on another one of the great hurdles for blockchain businesses to overcome: interoperability, or achieving seamless compatibility between different blockchain ledgers.

Indeed, for innovation to flourish, Hoskinson sees a need for a “Bluetooth or Wi-Fi moment.” Just as makers of consumer gadgetry settled on open standards allowing devices of all sorts to synch up, so too must blockchain technologists agree upon foundational protocols, he believes.

“We’re not going to get there”—meaning, make blockchains as impactful as consumer electronics—”in the financial industry unless we have good standards to move value and information between all these different ledgers,” he says.