During my bachelor’s I dove deep into the topic of blockchain, first a seminar paper, then my thesis. I wasn’t chasing quick money. I wanted to understand the hype: how can a digital asset like Bitcoin be worth hundreds of billions? Pretty quickly, the romance faded. But let’s start at the beginning — with a quick definition of what a blockchain is. If you already know this, feel free to skip the next six sections.
The idea hit the world through a nine-page PDF: the Bitcoin whitepaper by the pseudonymous Satoshi Nakamoto.
A foundational building block is the hash function — a one-way transformation from input to seemingly random output, that is infeasible to reverse. Tiny changes (even a single character) produce a completely different hash. The space of possible hashes is astronomically large. For SHA-256, it’s 2^{256} possibilities (about 1.16 × 10⁷⁷). In practical terms: you’re far more likely to win the lottery many times in a row than to guess a specific SHA-256 hash by chance. Hashes also behave like unique fingerprints for given inputs, which lets us check integrity quickly.
The next and probably most important ingredient for a Blockchain is a consensus mechanism — a way to agree on which transactions are valid. Normally this would be done by a trusted third party but for Blockchain this needs to be done decentralized. Here the original mechanism behind Bitcoin is Proof of Work (PoW).
Think of PoW as the “password-guessing” principle. Miners race to find a number (the nonce) that, when combined with the candidate block of transactions and the previous block’s hash (hence a chain), produces a new hash with special properties — for example a certain count of leading zeros. The network tunes the difficulty so the puzzle stays hard enough regardless of how many miners participate.
Whoever finds a valid solution first wins a block reward (newly issued coins plus fees). Everyone else can verify the solution near-instantly, and the network adopts the longest valid chain as canonical. PoW is decentralized and robust — but it’s also energy hungry by design.
So to win, machines must keep guessing —over and over — until luck hits. That expenditure boosts security but drives carbon emissions. Estimates for Bitcoin’s annual footprint have hovered around ~95 MtCO₂e/year in early 2025 (roughly ~0.2% of global emissions).
« >>> END TECHNICAL DEFINITION <<<
Now so far so good, as blockchain is pretty easy to understand and an innovative way to manage consensus across partners, besides it's huge economic footprint. So what are the problems I have with it?
My first point is on who actually uses it and for what? In real life, speculation clearly dominates and drives the price, not day-to-day payments and value: Some studies like from the Federal Reserve’s Survey of Household Economics and Decisio nmaking shows that 2023 about 7% of adults held or bought crypto as an investment, while only about 1% uses it for payments. With acceptence rates that are even dropping since the post-pandemic crypto hype. While 2021 about 12% US household had cryptos it dropped to → 10% (2022) → 7% (2023). In general nowadays two thirds of the americans say they have no trust in the technology.
This also mirrors my own circle: everyone speculates; rarely anyone uses the real benefit of crypto. Socially and economically it looks, at times, like a snowball system (Expecially when people say: "You ArE stILl EaRLy BrO"), for them it is pure FOMO and a cult.
Meanwhile volatility kills point-of-sale utility. No one wants to think in BTC-per-bread. Companies that hold large crypto balances assume balance-sheet risk. Yes, there are payment processors that instantly convert to fiat — but then you’re right back with intermediaries (and their fees/chargeback policies), which blockchain was supposed to avoid.
Back during the blockchain hype in 2021, nearly all industries have been investing into crypto to find some use-cases that would end in a real world value. Beside from the hype and the resulting marketing advantage, most of these projects failed or were abandoned. The main reason for blockchain back then was just to announce it and pump up the stock price of the company. I’m not saying that there are no real benefits, cryptos are a great way to send money overseas with small fees or into conflict regions. But there are also alternative ways to do it, that I will explain in the following up post. Another negative aspect is the morality of blockchain projects, as most of them are pretty much unregulated. While anonymous blockchain projects are attracting criminal usage: drugs, human trafficking, sanctions evasion, and more. Beside form the benefit for real world criminals, there are also many scams and frauds going on in the crypto space itself, like hacks, rug pulls, simple scams. The list is endless, but the website "Web3isDoingGreat.com" tries to track these issues and reports nearly $80 billion lost so far! Just google the FTX scandal to see how deep the rabbit hole goes. But still people give crypto another shot, hoping that this smart contract exploit was the last...
So web3 is obviously not doing great. Also something many people do not get about tokenization projects are the fact that they do not solve the oracle problem or source of truth, since it is really hard to connect the real world with the digital. So the biggest use case ends up to build all sorts of gambling systems into smart contracts — reflacting the gambling nature of cryptos. And again without a middleman, you’re out of luck when something goes wrong.
Ordinary people benefit from trusted third parties: chargebacks, customer support, regulation, brand liability. “No middleman” means: self-custody, OPSEC, full personal responsibility — something most people do not want.
Meanwhile in a crises like a military conflict or a grid blackout, with no Internet there will be no broadcasting of transactions. Making your BTC worthless, maybe it will be a bit useful in a end world scenario, but for me personally it is not worth the risk that it collapses in the long term, especially after a political shift in the U.S. and the end of the term of the so-called Crypto President Donald J. Trump. Also think of all the bullshit with the DOGE coin and elon musk calling a governmental agency after it. Maybe for him this is a meme, for others this is clearly market manipulation. Another thing i do not like about cryptos is that the market is somehow locked to the bitcoin price, as many altcoins just follow the bitcoin price movements. So if bitcoin crashes, the whole market crashes with it.
Speaking about bitcoin, there is a huge inequality in it, yes... the world is inequal by design and the wealthiest 1% of the world hold a third of the worlds wealth, but for crypto it is much worse!!!. With Bitcoin, for example: • 4 addresses hold about 2.8% of all Bitcoin • 100 addresses hold roughly 13% of all existing Bitcoin • half of all Bitcoin is concentrated in the hands of just 20,000 addresses!!! This sounds definitely like a well balanced system... not... just take the sentence from before and translate it to bitcoin. "Half of all bitcoin is basically hold by 0,0000025% of the worlds population..."
There are also companies that simply hold large ammounts of bitcoin, as their business model. Many of these companies bought bitcoin for an average price of 76k USD, a price drop below this, and a starting sell of could start a death spiral for the coin. This is a very narrow margin of safety for such a volatile asset. So in my opinion bitcoin is pretty much a ticking time bomb.
Another thing that is highly centralized in bitcoin is the mining process. While bitcoin was supposed to be decentralized, the mining process is pretty much centralized in china (before the ban) and now in the US. Here only a handfull of companies control the majority of the mining power. This again makes the whole system pretty much vulnerable to political influence and manipulation.
Enough rant on bitcoin (I will not even talk about Ethereum since it is highly influenced by the founders, just look at their stakes...), let's look at stable-coins, as they are mostly centralized and used for money transfer, something that banks or paypal can do since ages, without the blockchain. Sure the blockchain works decentralized, but there are alternatives (next post), since a downside of stable coins is that they need a central entity that acts like the bank to redeem, so why not trust them also in the processing of the transactions. Again the big profiters of stable coins are the people behind it. Like for example the USD1 coin, where the company behind is held by a mayority of the trump family. So now if a country, would like to do something in favor to the trump administartion (not the american people) the country could possibly simply say that from now on, they use USD1 for their dollar payments. Now what is the big deal? The problem I see (a hypothesis of mine) is that the interest income of the money goes straight to the token issuer, as they hold the real USD. With the current interest rate and the current market cap of USD1 these would be 100 millions or dollars per year. In my home country something like this would be not imagable.
The whole system is scuffed in my opinion and what has started as a liberation and independence from the old banking system, has transformed into a corrupt system that is even worse, where primary the people behind profit from it...
Another thing is that crypto wasn't that good trade in the past. While yeah, if you would have bought bitcoin in 2012 you would be rich now, but with high quality stocks you could have outperformed bitcoin. For everyday life, the costs, risks, and the convenience of established intermediaries outweigh any potential benefits. For these reasons I think the real "digital" currency of the future will look likely entirely different than blockchain. In one of my following post I will explain what I expect it to look like (And no I will not sell you the next shitcoin - promise). So overall IMHO most blockchain projects are most of the time just there to make the people behind rich and that's all. While I actually already talked to a couple of founders of blockchain projects (I will not say who) and while questioning them with my critcal questions they actually admitted that the only benefit for them that "blockchain" brings, is marketing and that's all...