Blockchain technology is Mostly Useless™.

It’s pretty much nothing more than a distributed permanent ledger system for recording transactions.

That’s it.

It solves the same problem that having a trusted broker, like Amazon, or E*Trade, or PayPal, or Visa, or a title company, certify a transaction on your behalf solves.

And fails to solve a lot of other things brokers actually solve, as well.

In any security system, there are three components.

These are:

• Authentication — I am who I say I am
• Authorization — who I say I am is allowed to do the thing I’m saying I want to do
• Nonrepudiation — The person who requested this action actually requested it, and we’re sure it was them, and not someone pretending to be them

The part a permanent ledger solves is nonrepudiation.

Or to put it in terms a 5-year-old could understand: “no backsies”.

So what problem can Blockchain solve that a permanent ledger held by a trusted broker cannot solve?

It can let you distribute the permanent ledger all over hell and gone, without having to resort to a trusted broker.

You can even keep your own copy, if you want.

And because of the cryptographic signatures, I can’t claim that I did not, in fact order and pay for that inflatable sheep from The Inflate-A-Date Corporation of Trenton, New Jersey.

You could do the same thing, with a broker like Amazon.

But now you don’t need Amazon to do it.

So what problems can’t Blockchain solve, that everyone mistakenly believes it can?

Great question, and one which no one asks, which is why I’m glad I’m pretending you’ve asked it.

Blockchain does not render transactions anonymous.

If anything, it’s a lot more like hiring the graffiti artist Banksy to write:

Bob Bobertson bought an inflatable sheep from The Inflate-A-Date Corporation of Trenton, New Jersey, and now he can’t claim it never happened

on 10,000 walls, distributed all over the planet.

And now, because everyone loves Banksy’s work, third parties are copying that same graffiti to new walls, all the time.

Live a millennium, spend every waking hour scrubbing walls: that’s never going away.

OK; so what does the Blockchain property “distributed all over hell and gone” potentially enable?

I’m glad you asked that, too; you know, you ask really good questions, for a figment of my imagination!

It lets you disintermediate transactions.

In theory, this is rather powerful. You gain some things, you lose others.

What you gain:

• You get rid of the Amazon brokerage fee
• You get rid of the single chokepoint for sales tax; if the government wants their sales tax, they have to prove a transaction took place (or you can give it to them voluntarily)
• All of the middlemen? Gone!

What you lose:

• Transaction escrow — all payments are up front: hope you trust the person you are buying from, with no broker to vouch for them
• Dispute resolution — someone sends you an empty box? Too bad you don’t have a broker you can go to to penalize them for being a bad actor
• Schelling points — where do I go to buy that widget again? I know “Amazon”; how do I find “some widget seller somewhere”?

And if you don’t think those things all sound like disadvantages… welcome to the “Global Craig’s List”, only you never get to meet the guy on the other end of the transaction, and you send them cash, up front.

Count me in on this “Global Craig’s List” thing; I’m an idiot; where do I download the software?

You don’t.

Writing it would be massively complicated, since you essentially have a tiny piece of technology that you could use as part of the implementation of the software.

What you don’t have is a trading platform built on the technology, and then you don’t have software which runs on top of that platform as a server (doing selling) or a client (doing buying).

And that’s all before you do any catalog management and display, or anything else.

You are talking about needing another (literally, and quite conservatively) 30,000 times as much code as has already been written for just the blockchain itself.

But we haven’t even gotten to the best part yet!

The best part.

Say you’re a company that has a dream of providing this platform.

The whole thing, not just the teeny, tiny blockchain part.

You hire the best engineers; best at security, best at writing bug-free code, the best at everything.

And you get it done in half a decade or a decade.

It’s infrastructure.

All the real software engineers out there are currently laughing their asses off.

Because you never make any money from infrastructure. No one pays for it.

But maybe you're an idealistic “CTO” at a Blockchain startup, and you think people will buy your technology from you, because if you just spend a lot of effort building something, surely it will be worth a lot of money!

You’re wrong.

Let me ask you one question, oh hypothetical CTO…

When was the last time you bought a TCP/IP stack?

Note: This question has been sitting out there for a while; Quora User’s recent answer prompted me to answer as well. I’m pretty sure my answer is both more fun, and addresses the “utility” issue in a more profound way.