More of a wish than a challenge but federated identities would be awesome. Home instance offline? No problem, just switch servers. No need to try and sync settings and subscriptions between accounts.
Blockchains already do this with public key cryptography. Your “login and password” would just be a Mnemonic Phrase. The fediverse just distributes the public information to use that phrase.
Yeah this happened to some guy in Australia hosting a tor exit node if I recall? I saw it on Lemmy, but didn’t save the link. Since he wasn’t behind a corporation, I think he got held personally liable. Best bet in hosting an instance is probably to form a corporation for some legal protections.
I’m big into privacy and its not so much about an entity knowing stuff about me personally, but rather the entity knows stuff about everyone and weaponizes it against me.
Political efforts to get citizens to vote against their own self interests or suppressing votes of those who don’t fall in line.
Fueling hate machines to distract citizens with infighting so they don’t focus on those hoarding wealth and power.
Controlling access to content that those in power see as “harmful” (to them).