None of the responses in this thread so far give a specific real-world example of _how_ blockchains solve a problem. Just repeating the mantra that a decentralised ledger is great for payments or trade settlements or whatever. Yes but how?
The only use case I know, beyond proof of ownership of coins/tokens (and, again, how can that be applied to a real world problem), is proof of document state at a certain point in time (via storing document hashes in the blockchain) which clearly has some uses in law for example, but apart from that I am stumped.
It's sort of a silly question. It's like asking how telephones can solve a problem. The blockchain is a network not unlike the web, the telephone network, and the highway network. Networks don't solve problems in themselves they enable new collaboration models and collaborators solve the problem. People keep getting hung up on implementation details (BTC is one implementation) and silly hype (the fall of Fed!) which is how these things go. Ignore that.
Go to the source code. This stuff is open-source and well documented. Once you start reading the code this stuff makes sense. Write your own blockchain. In fact it's not that hard and it'll make the basic concepts really sink in.
Blockchains are a social construct and what ultimately protects them are the participants. Exactly like actual currencies they are subject to market forces; people either believe in and want the currency or they don't. It's this confidence that gives the currency strength.
More simply:
"On medium to long time scales, humans are quite good at consensus. Even if an adversary had access to unlimited hashing power, and came out with a 51% attack of any major blockchain that reverted even the last month of history, convincing the community that this chain is legitimate is much harder than just outrunning the main chain’s hashpower. They would need to subvert block explorers, every trusted member in the community, the New York Times, archive.org, and many other sources on the internet; all in all, convincing the world that the new attack chain is the one that came first in the information technology-dense 21st century is about as hard as convincing the world that the US moon landings never happened. These social considerations are what ultimately protect any blockchain in the long term, regardless of whether or not the blockchain’s community admits it (note that Bitcoin Core does admit this primacy of the social layer)." [1]
[1] https://medium.com/@VitalikButerin/a-proof-of-stake-design-p...
The subtlety here is making the distinction between confidence and resistance to attack. They're not the same thing at all. And what's interesting here is that, going off the model of real currencies, one could assume market forces will prevail here. Developed nations let their currencies float precisely because on the whole they're confident that the market will ultimately punish any malicious attacker who attempts to destroy the currency by selling large amounts of it.