How would you justify why blockchain would be superior over a centralized computing architecture?

I understand “depending on use case”. I’ve been working with a couple blockchains (developing on it, educating people about it) for a few years now. I still can’t coherently explain the advantages of blockchain to technically savvy people even in established use cases. There are actually many many accomplished engineers I’ve met who have spent time learning about blockchain but still dismiss its practical use cases. For example:

Tokenization - this is a well established use case of blockchain. But the counter argument goes: why can’t you build a centralized backend like how Reddit keeps track of Karma pts? Very few people complain about Reddit karma system and it’s used to screen users, prioritize posts, and many things on a social media platform. If you want to track these points and allow exchanges across different platforms (putting aside whether platforms or users even would like this to happen), there are already ways to implement idempotency with some structure of API requests so these changes can be reflected across platforms to minimize double spend problems. Putting these functionalities on a blockchain only makes the economics more volatile (for example, ASAs require min balance and price of Algo experiences fluctuations).

I understand the “cool factor” of being able to do this peer-to-peer but as recent government crackdowns have shown, authorities are still able to minimize the impact of crypto and blockchain by regulating the on-ramps into blockchain. Also it’ll turn off a lot of people if I have to tell someone blockchain is about resisting the government.

Can someone smarter than me walk me through how you would address these concerns/criticisms?

My one sentence take is that blockchains allow the abstraction of trust.

In an example like Reddit, the points are centralized in their database and trust is implicit that they are tallying them correctly. There is not much use to putting that information on chain because its slower and more expensive than just a relational db.

In a system that would require you may need to trust someone you don’t know, like swapping an ASA for Algos where you don’t know the current owner, a blockchain allows you to trust that the transaction will proceed as expected. This does require you to trust the smart contracts and blockchain code do what is expected but both are auditable.

A good overview document is available here to reference

Hi Ben,

I suppose what my ask is, what specific features does blockchain enable that would be superior to a centralized architecture? “abstraction of trust” is just too vague and has not worked in convincing technically savvy people (in my experience). For example, a big part of trust is also accountability. When you have a centralized entity such as Reddit, if they tally wrong, they may open themselves up to bad user exp or even lawsuit. Thus, an avg consumer can trust that Reddit is acting in good faith because they are economically and legally liable for their system. In blockchain, not only is trust abstracted, accountability is also abstracted, in that if a bug happens or more commonly transactions based on false premises that can no longer be reversed, the accountability is dispersed among the thousands of nodes that participated in verifying the transactions. So no one is accountable at the end. In the case of “eth classic vs eth”, you also have a “too big to fail” problem (if a hack big enough happens, users can be refunded by splitting chains but if you’re a grandma who got scammed, you’re SOL)

You brought up a few good points. Financial audit-ability and transparency are huge features since financial institutions routinely engage in money laundering, rehypothecation, derivative products that no one understands, all for the purpose of their own profit. Maybe it also allows applications to be built on top of the blockchain, with the ledger of value independent from the proprietary application systems.

The doc you provided is also very helpful. I think you just have to tailor your specific purpose to the 7 guiding principles (security, trust, immutability, transparency, low cost, efficiency, composability).