I see some very smart people being critic of blockchain tech, sometimes almost salty. They bring valid points: it is a very inefficient database, there’s nothing substantially new people are doing with it, DeFi is self-referential. All of these are true! At least in part. On top of this the industry is over-hyped and inundated by startups with millions in funding and flashy websites with a lot of buzzwords. This makes the problem worse because the real tech and innovation is obfuscated and often hard to find.
The root problem is that blockchain is hard and the tech is still in a primitive phase, often still subject to active research. I think this is a new era of computation and we are still figuring out the paradigms — of course the quality of the applications is going to be all over the place. Think how cumbersome it must have been programming computers with punched cards. I’m sure people were promised a brand new era of automation even back then! But it took decades to get there, with many bumps on the road.
At their core blockchains work by a clever combination of cryptography and game theory. I find many engineers often underestimate the importance of the latter. The economic incentives are used in a blockchain to create a very hostile environment: nodes compete to get rewards. As a side effect they run the infrastructure of the blockchain for others to use. The competition is kept honest by cryptography (i.e. you can’t cheat), but it is the economic aspect that makes it a palatable proposition for the nodes.
The whole idea is to create a computation model where you, the user that benefits from the computation being done, does not have to trust a single actor. Your trust is rather put in the architecture of this mathematical, cryptographic and economic system. This would be a perfect fit for “applications” typically run by governments such as: identity certification, tax systems, tenders, online voting and of course the banking system. I think blockchain is eventually going to be the backend tech for many of these use-cases. However, while governments are still fighting a tech they (and most of us) don’t understand, people are finding other use-cases to make something with it. And yeah many ride the hype wave and don’t really add value.