How Blockchains Digitize Trust
In a world where everything goes digital, why hasn’t trust itself been digitized yet?
By Ankush Tiwari
We all have seen the positive impact of digitization across many parts of our lives and industry verticals. It has significantly improved efficiency and delivered great results for humanity across all sectors like fintech, transportation and education. With rapid digitization coming our way, we are destined to see an exponential increase in productivity. With AI, we will see a new way in which our day-to-day behavior will change. In this new world, trust is becoming more important yet more scarce at the same time. Surprisingly, with everything else going digital, the one fundamental aspect that remains un-digitized is “multi-party trust”.
Definition
What is "multi-party trust"?
Today, when we are doing a transaction between multiple parties, it is backed by either legal documentation or some form of commitment between multiple parties. The way it is achieved today is non-digital, time-consuming, and expensive to establish and execute. Let us take a look at some examples where the trust establishment between multiple parties needs digitization:
- How to verify data on LinkedIn for correctness. There seem to be no bad hires or profiles on LinkedIn today.
- How to know of ratings and reviews comments on social media are credible.
- How a content creator can trust an aggregator platform when being paid “per view”?
- How do I trust the digital advertising metrics reported to me by platform providers?
- How can I trust reports from my bank, considering the recent challenges in the banking industry?
There are many more examples like the above where trust issues arise. If we can digitize, establish and enforce trust, we will solve many challenges that indirectly come up with massive digitization.
What is the impact
Revenue loss due to non-digitization of multi-party trust
- Background checks for employees
- Know-your-customer (KYC) for new clients
- Insurance-related fraud
- Supply-chain-related trust issues and leakages
- Variable business models requiring trust – pay-per-view, pay-per-click, etc.
Solution Approach
How can we digitize trust?
- Data shared between multiple parties is immutable.
- All parties use an identical copy of data.
- All historical entries of data are available for audits.
- The data entry and modification are controlled by algorithms concerning a defined set of rules and are always auditable.
- Immutability of data
- Decentralized data storage and governance
- Real-time audit of data by all involved parties
Example
Blockchain technology addressing multi-party trust issues
- All institutions and organizations store or issue student/employee records on a public blockchain
- The digitized and cryptographically certified data is available to students/employees in their wallet
- Students/employees can share data as required for verification to an entity
- Students/employees can share data as required for verification to an entity
- The entity can verify the validity of data on the blockchain in real-time
Blockchain makes data immutable and establishes multi-party trust quickly. Transparency and immutability of data on the Blockchain allow for real-time auditing by all involved parties. This digitization of trust delivers massive cost and time benefits.
I am not saying we need to slow down digitization, or digitization at an exponential pace is not good. If we want to reap the exponential benefits of digitization, then TRUST MUST GET DIGITIZED. In fact, digitization of trust will become an imperative in the near future. Blockchain and Web3 offer the solution to make this happen.
Start your Web3 journey today with zbyte.
