> Now, if we just put the whole thing on a blockchain that would totally solve that problem.

I would be very surprised if this were true, as I have failed to find a sound use of a blockchain outside of a fungible currency. 

The problems are always deciding whether a change is valid, and enforcing the on-chain information. With Bitcoin a change is valid if it sends value less than what's in a wallet to somewhere and is signed by the corresponding private key. The change is also respected because now the wallet doesn't have control of the value, and (probably) someone else does. Both of these are automated and verifiable by anyone.

When you put something else on the chain, say the deed to a house, miners can't validate the change unless it's an ordinal. Fair enough, we can assign an ordinal. But they also can't enforce the effect: only the government decides who owns a house. Once you identify this part which isn't automated, you might as well replace the blockchain with a database.

So, on the one hand, it seems that they did the right thing and avoided using a blockchain in a way that doesn't make sense. But on the other, it's presumably because only one group can determine whether a change is valid, which means it was never distributed in the first place. 

Identity is a surprisingly difficult problem. Nostr gets most of it right, except for combining identity and authorization into a single key. No reasonable system still uses "$username:$password" as their session id.