Blockchain - Does trust really matter?
Trust has gained increased focus when discussing distributed ledger technology ever since Blockchain first emerged, and at the same time, trust has always been evaluated and researched in correspondence to the evolution of society and, more specifically, technology. Furthermore, the relationship between trust and technology has transformed simultaneously as changes to personal- and organizational relationships have matured.
- By: Marc Pascal Landgreen
- Published: 22-08-2017
Blockchain has now existed for about nine years and we are yet to discover the full potential of the technology; even so, major papers and consultancies have coined Blockchain ‘the trust protocol’, ‘the trust machine’, ‘the new trust economy’ and the like. Some of which might be credited to Blockchain’s birth in 2008 as a response to distrust in centralized institutions following the financial crisis.
This article seeks to underline the importance between the difference in one’s trust towards a specific technology, and having the technology facilitate trust itself - the latter being Blockchain.
Currently, the global reach made possible by contemporary technology means companies and individuals have the opportunity to conduct business with a much wider array of partners and stakeholders, the vast majority of which an interested party will not have a previous relationship with. Trust is a key component to any relationship, transaction or distribution of information, and should be highlighted in this new age of technology where stakeholders are no longer restricted by geography or limited to already established partnerships. This is highlighted by new aspects of business such as the sharing economy, and peer-to-peer networks, and Blockchain as a means to find a trust-free solution to transacting business.
Private or public Blockchain
Private Blockchains is also known as permissioned based Blockchains enable the members to have credentials allowing them to modify the ruleset. In a private Blockchain there is no need for anonymous miners to validate transactions because this is controlled by predetermined members.
On the other hand, you have the public Blockchain which stems from the original Bitcoin idea of a fully open and permissionless network; both types share similar levels of security and verification. In regard to the public Blockchain, transparency is a key component of the technology in the sense that every transaction of the block is visible to every party involved in the transaction.
Transparency also means immutability throughout the chain; the possibility of editing or deleting existing transactions does not exist. The viewability of the Blockchain is the same for all the parties, and that gives the Blockchain a so called ‘single-view’ for all participants. This is not necessarily the case with private implementations.
The immutable nature of the Blockchain, also provides a level of certainty to participants that transactions added to the ledger have actually occurred, and that responsible parties reporting deliverables have met all pre-established conditions necessary for the completion of the said transaction. It would appear from this that, as time progresses, there would be a collection of evidence to support a stakeholder’s ability to deliver on their promises as the ledger becomes updated with successful transactions. Therefore, increasing trust between possible stakeholders.
The problem with this interpretation is the fact that only successful transactions are being added to the ledger, and there is no reporting being done for transactions where one or both parties fail to fulfil the pre-established conditions outlined for the transaction to occur. Thus, a stakeholder might have an apparent long history of successfully fulfilling agreements, while in reality they have an even longer list of transactions to be completed. This has especially serious implications for stakeholders undertaking numerous smart contracts at one time. In this vein, it is relevant to look at transparency of Blockchain and how Blockchain could be setup or implemented.
In a B2B perspective transferring years of tacit industry expert knowledge onto a complex technology can be an extensive challenge. Since Blockchain has not matured yet, it requires ...
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Marc Pascal Landgreen
Marc is currently finishing a Master of Science degree in E-business at Copenhagen Business School while working part time as a Digital Consultant at the digital agency Sunrise A/S and being a Co-Founder and Partner of the eSports company GameBettor. While being a great FinTech enthusiast Marc has done a wide array of projects on Blockchain, specifically looking into the legal aspects surrounding Blockchain and the application of smart contracts.