Why there is no use case for blockchain.

Every accountable ledger is already distributed.

Rushabh Mehta
4 min readApr 24, 2021


I remember being excited about Bitcoins and blockchain years ago on HackerNews when it first started getting popular. I was instantly drawn into this concept of a world where power is instantly distributed because governments can no longer control the money supply. While I did set up a wallet and did some monkeying around, my interest was more out of curiosity than any real feeling of being “part of the revolution”.

Fast forward to today when crypto currencies have crossed 1 trillion dollars of market cap and have given life to even new asset classes like NFTs (non fungible tokens) that are basically another ledger that acts as a proof of ownership of digital art. A crypto currency exchange just went public. Crypto has many famous people backing it like Marc Andreesson of a16z Capital and the world famous entrepreneur Elon Musk. It just seems that the world has so much excess capital that it cannot put to productive use that it is willing to put it in such non productive assets like crypto and NFTs.

Dramatic increase in the value of bitcoins

How crypto transactions are secured

What crypto currencies tout to solve is the problem of “trust”. The truth is owned by everyone. Since we are living in an age with decreasing trust in institutions, crypto seems like a solution made for our times. The way it solves this is simple: The entire transaction history (called the ledger) is copied to all the people who are in the system (via their “digital wallets”). This means that once a transaction is booked, in a short period all the people acknowledge the transaction. If the transaction history is so transparent and copied over, there is very little chance someone will tamper it. It is based on the simple concept that transparency builds trust. Wow — this is amazing, right?

What makes your ledgers secure?

Well, when you think about it, global trade and accounting already works this way.

Imagine if things did not work that way, you could suddenly imagine and write in your own accounting books that you just made a big transaction with someone and claim that you are rich. But that is not how it works.

Every transaction is either backed by a banknote or a counter-party ledger. So you can’t imagine things.

Take any simple transaction:

  1. Entity A sells goods worth of $X to Entity B
  2. Entity B pays for these goods with a check.

Let us look at the transaction trail involved here:

Both the red and blue transactions have 3 copies. And they must match to make them valid.

As you can see there are two other entities that are keep track of transactions:

  1. The government
  2. The bank (could be multiple banks here)

This is how all accounting systems are kept real. Multiple copies of the same transaction are kept by different entities. Making a fraudulent transaction would mean manipulating the books of 3 different entities. For example if Entity A wants to claim a separate amount than $X, after completing the transaction, it would need to change the entries of Entity B, the Bank and the government.

What does crypto achieve then?

Crypto currencies claim that they can bypass both the government and the bank and make transactions happen. That too happens today. In that sense they are like gold or hard cash. The difference is that bitcoin itself has no value, and you can’t even use it in jewellery like gold. So it is actually nothing new.

You would use bitcoins for the same reason you would use gold (other than fashion)

This basically helps you smuggle large sums of wealth without making it transparent to the rest of the society — that is anonymous transfer of wealth. Except that bitcoins are not so anonymous either. If at any point you transfer it into real money via an exchange, your details will be captured and then all your past transactions will be too.

So what is the use of crypto?

Probably nothing other than the fact that its a nice experiment. Most people are buying crypto today so that they can dump it later at higher prices. That is the only thing that is happening here. I did a quick survey at our team and found that most people think that crypto has actual value.

Most people still don’t see that it is nothing but a Ponzi scheme, where you want to dump it to the next unsuspecting fool before its value collapses. There is very little value that such assets work in the long run.

Compare this to the alternatives:

  1. Putting money in a bank gives you interest (because it is deployed as debt)
  2. Buying stocks gives you dividend or increased valuation due to growing company assets.
  3. Buying a piece of real estate means you can actually use it even if the value collapses.
  4. Buying commodities (minerals, oil etc) has real value — commodities can be sold.

Cryptocurrencies have no value and you might end up holding a part of a worthless asset. Assets like cryptocurrencies could be the first ones to fall once the global wave of liquidity ends. You don’t want to end up holding meaningless digital garbage.



Rushabh Mehta

founder, frappe | the best code is the one that is not written