Will Blockchains ever be able to alter the traditional understanding of Trust?

Blockchain technology has been promising to create new forms of #trust in the marketplace. Evangelists have been arguing for many years now that it will solve the problem of trust deficit in the traditional financial system; a feature (or bug?) since the 2008 financial crash. At its core, the basic function of a blockchain is to reliably share information among parties who may not necessarily trust each other in the traditional sense but will rely on the underlying technology system that functions sans central gatekeepers and administrators. Reid Hoffman paradoxically referred to this as “trustless trust” nearly a decade ago!

As time has progressed, it is clear that blockchain technology is likely to complementarily enhance the current global payment apparatus and not fully replace it.?

"The God Protocol" – is how scientist Nick Szabo described the design principles of such a network way back in the 1990s.? The #blockchaintechnology is nothing but an open source, immutable digital ledger that uses cryptography to record transactions on a distributed network. Transactions are verified by 'volunteers' who act as nodes in the network, rather than by a central authority, making this a decentralized system. Blockchain technology is best known for its use in transacting in crypto especially Bitcoin (or other digital asset), but it also has use cases across industries such as in supply chain (provenance), real estate (property rights), healthcare (records), advertising (clickfraud), education (certificate issuance) and so on.?Therefore, with blockchain, trust in information exchange is fundamentally getting altered.?

Many experts have been making this point that the mainstream adoption of blockchain technology is changing how markets (will) understand trust:?

• Don Tapscott and Alex Tapscott who have published extensively on the subject argue in ‘Blockchain Revolution’ that "…blockchain technology has the potential to create a new type of trust architecture that is more democratic and transparent…blockchain can help to solve the problem of trust in traditional institutions such as banks and governments.”?
• Renowned trust expert Rachel Botsman in ‘Who Can You Trust?: How Technology Brought Us Together and Why It Might Drive Us Apart’ explores the changing nature of trust in the digital age and how blockchain can transform how trust is established. Rachel further suggests that blockchain can help to create more trustworthy and reliable systems by reducing the need for intermediaries.?
• Primavera De Filippi and Aaron Wright in ‘Blockchain and the Law: The Rule of Code’ state that “it (blockchain) has the potential to create new forms of trust and governance and that that blockchain-based systems can help to create more democratic and decentralized forms of governance.”?
• Entrepreneur and investor William Mougayar in ‘The Business Blockchain: Promise, Practice, and Application of the Next Internet Technology’ argues that blockchain technology has the potential to create new forms of trust and value exchanges. Mougayar also suggests that blockchain-based systems can help to reduce transaction costs and create more efficient and trustworthy systems.

An all important work in this area that will be discussed here in greater detail is by Wharton School professor and blockchain expert Kevin Werbach who in ‘Blockchain and the New Trust Architecture’ explores in great detail the concept of trust in the context of blockchains. He states that “trust is fundamental to any economic or social system and that blockchain technology provides a new way to establish trust.” Werbach reiterates the point that current trust systems rely on intermediaries such as banks or governments to establish trust whereas blockchain technology allows for trust to be established in a decentralized manner and without the need for intermediaries. Werbach also emphasizes the importance of #reputation in establishing trust and explores how blockchain technology can be used to create more reliable and transparent reputation systems.?

• “The public blockchain architecture does not assume any participant in the network will be trustworthy; to the contrary, it assumes that some will not. If one could reasonably believe that all validation nodes will record information truthfully, achieving consensus would be simple. Conversely, if most participants consistently cheated, trusting the system would be foolhardy. In other words, if you can trust all of the people some of the time, or some of the people all of the time, is a reliable consensus possible? This is a basic question in sociology and political theory. After all, in the real world, people are generally honest only part of the time. In the language of economics, they behave opportunistically, violating rules when the perceived benefits exceed the costs.”
• “The blockchain as a trust platform requires only an Internet connection and a computer, so it can go all sorts of places where the current financial system does not. “Decentralization” means that parties need not cede power to a third party. “Shared truth” (will) mean that the parties themselves cannot exercise exclusive authority.”
• “The core property of a distributed trust architecture is that it makes it possible to trust the output of a system without necessarily trusting any of its individual components. Normally, these two go together.”

The blockchain promises to create an Internet of Value by taking aspects of the (digital) economy that are traditionally centralized and replace them with distributed forms of trust. It will enable users to pay for goods and services or make enforceable commitments (e.g. smart contracts) in the same manner as they presently share and receive data across the Internet.

But, Werbach spells out a word of caution as well and rightly so. He warns that “blockchain systems that ignore law and governance are likely to fail, or to become outlaw technologies irrelevant to the mainstream economy. If, however, we recognize the blockchain as a kind of legal technology that shapes behaviour in new ways, it can be harnessed to create tremendous business and social value.” In the end, reputation is also a very crucial element of trust and the blockchain technology has the potential to transform how reputation will be earned and protected in a Web 3.0 world.?

Concluding with a Forbes article on the same subject which states that "...the more we employ global digital leverage by merely pushing an 'Enter' key, the more we need digital trust?– crypto-trust, like Blockchain technology... (backed by) our ability to move trust at the speed of light..." Notwithstanding the regulatory hurdles across geographies and waiting for its "ChatGPT moment" as commented by Satya Nadella, it remains to be seen if and when will the blockchain promise to fundamentally alter Trust will fully materialize.?

###

Also check related:

• 'BAT' for privacy on the 'Block'
• In Blockchain we (will) trust
• Bet on the Block
• Block the fakenews