(On Legitimacy of Blockchains - 1)
When it comes to blockchain technology, one must be careful to observe the benefits/risks involved within it.
Ever since the dawn of Bitcoin, there have been numerous models of consensus in the realm of distributed finance. The most popular and original model is PoW (Proof of Work), which validates transactions based on who spent the most amount of computational energy (aka "hash power") to find out one of the input values of a cryptographic hash function which results in a certain number of consecutive zeroes. This, however, quickly raises a couple of questionable problems. First of all, validation of transaction blocks based on who goes through the searching process the fastest inevitably leads to lots of electrical energy being wasted.
Also, individual miner nodes can all converge into one gigantic mining pool and dominate the hash race, which means that some kind of "mining monopoly" is bound to happen. Eventually, the implication of PoW is that a single enormous mining pool which dominates more than half of the blockchain's hash power will be capable of controlling and manipulating the way transactions are being processed.
Of course, Satoshi Nakamoto's initial whitepaper clearly states that anyone who has dominated the blockchain in terms of hash power won't be willing to validate transactions in any fraudulent manner whatsoever, since doing so will critically harm the legitimacy of the blockchain and thus harm the economic interests of those who own the dominant mining pool. However, this is only true if the blockchain itself is actively competing with other financial protocols by which it can be replaced. What if, for example, Bitcoin really manages to become the world's most popular currency, so incomparably popular that it even replaces the reserve currency status of the United States dollars?
If the popularity of Bitcoin reaches such a level of pervasion in the global economy, people will no longer be able to just reject the authenticity of its blockchain protocol and stop using it no matter how corrupt it gets. Can we simply ignore the existence of U.S. dollars if we don't like the way the Federal Reserve keeps printing it out without even basing its value upon the gold standard? Of course not, since the USD occupies the core part of the economy and thus rejecting it will lead us nowhere but a financial apocalypse.
The same story goes with any PoW-based cryptocurrency. Once it beats out all competitors, anyone who is in charge of its largest mining pool will be entitled to manipulate the way the blockchain works. And no one will be able to do anything about it unless they have the courage to invent their own independent economic system.