Doesn't really help anything.

Things on the blockchain are still easily readable in most cases. For example: https://www.blockchain.com/explorer

You can go see ANY bitcoin transaction which has ever occured.

I also don't think blockchain would scale performance wise, to the level needed by lemmy. In the example of bitcoin, processing transactions is already painfully slow.

For encryption, its easiest to just enable in-place data encryption on your instance.... But, again, that does not help ANYTHING, because all of your data is replicated to every other subscribed instance.

Hell, the Feds don't even need to seize your server. They just need to federate with it.