People often assume that since I have background in computers, I must be an enthusiast of blockchain technology. I have never seen much use for it, since anything that blockchains can do, a traditional database can do more efficiently. But I understand that blockchains have an application, a situation in which they are the right tool for the job: if you cannot build a trustworthy institution and want to keep shared records, blockchains will let you.

By institutions, I mean organizations like banks or government, which could keep these records, along with a common understanding of the rules they use. If I, as an individual, want to make a system for distributed, anonymous users to keep records, it is easy to make an interface to a database that provides that. I would define the rules, and my software would follow them. But then you have to trust me to not use my power over the rules to my advantage. Or, in the case of societal institutions, we have to believe in systems of oversight to ensure good behavior and procedures for responding to bad behavior. If you cannot trust a central authority, traditional databases will not work.

The cost to pay for this lack of trust is energy use. The blockchain mining system turns computing power into security, with bitcoin alone consuming more electricity annually than Austria (73 TWh/yr vs. 70 TWh/yr). Blockchain technology is built on plentiful, cheap energy.

I think the excitement about blockchain technology offers some insight into the world today, and the world that we are working to create. The world that blockchains are made for is a world of abundance, but abundance squandered by the lack of trusted institutions. And that is not all.

It is a world not overly concerned with inequality. If there was extreme inequality of mining power, or collusion at the top, blockchain ledgers could be forged. Instead, the fear is against petty theft. We worry about minor actors breaking the law, and no institutions to recognize it and undo the damage.

It is a world where anonymity is supreme. Letting institutions know our identity a necessary condition for allowing them to provide oversight. In a world of corrupt institutions, your identity might be used against you.

It is a world in which you pay to maintain your own security. As mining rewards dwindle, it will be those who have the most to lose who will maintain the system. But in this, it must also be a world of continual competition, because if a single user or cartel effectively paid for the whole system, it would also control the ledgers.

So, when people express such excitement about this or that application of blockchains, I mourn the loss of cooperation and common ground. Only a world of abundance could support blockchains, but only a fragmented world would need them.