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Trust is the basis of any economic or social transaction, but it is a scarce commodity these days, and not only in the business world<\/p>\n<\/blockquote>\n

According to a new global survey by Edelman, trust in four institutions \u2013 government, business, the media and non-governmental organizations \u2013 is not only in decline, but last year it had the largest drop in the history of the annual survey. Nearly two-thirds of people surveyed in 28 countries do not trust the four institutions to “do what is right” and more than 50 percent say “the system” does not work for them.<\/p>\n

In this climate, people’s social and economic concerns, including globalization, the pace of innovation, and the erosion of social values, become fears that spur the rise of populist actions as we are seeing in several Western democracies. To rebuild trust and close the growing gap between the performance of democratic institutions and the expectations of citizens, institutions must step out of their traditional roles and pursue a new, more open, secure, and transparent operating model that puts people at the center of everything they do.<\/p>\n

It is obvious that Blockchain as an emerging technology cannot create trust on its own \"\"where it does not exist. However, their distributed nature makes new collaborative, open, and reliable infrastructures possible, and their trust protocols have the potential to facilitate the new institutions needed to rebuild trust in our social and economic order. This vision and its strategic implications is what we explore in this article.<\/p>\n

How does blockchain work?<\/h3>\n

As such, blockchain basically consists of two separate elements: on the one hand a distributed database technology,<\/strong> which supports an encrypted ledger, distributed and replicated across all nodes of the network, containing ordered chains of blocks of information, which could represent transactions, contracts, assets, identities or virtually anything that can be stored in digital form, and on the other hand, a trust protocol,<\/strong> which makes it possible for community members with the copy of the ledger they own, to validate the updates of the ledger, and avoid double entries, collectively.<\/p>\n

As a distributed P2P network, communication occurs directly between peers rather than through a central node. Each node has a copy of all previously validated transaction blocks (i.e., the ledger), stores and sends the information to all the other nodes. Each node, or user, on a blockchain has a unique address that identifies it and users can choose to remain anonymous or provide proof of their identity to others.<\/p>\n

Once a transaction is recorded in the database and the ledgers are updated, the records cannot be altered, as they are linked to each previous transaction record (hence the term “string”). Various algorithms and cryptographic computational approaches are used to ensure the integrity of the set, and that the recording in the database is permanent, chronologically ordered, and available to everyone else on the network. You can see a brief visual introduction to the technology in this video.<\/a><\/p>\n

The potential of blockchain<\/h3>\n

Although blockchain was originally nothing more than the technology behind Bitcoin, it quickly became apparent that its distributed database architecture had applications beyond cryptocurrencies. And, what has really caught my attention has been the fact that the same blockchain principles that guarantee financial transactions, can guarantee the trust of any transfer of social or economic value, without the need for a central structure (bank, government or portal) to act as a “third party” in the verification and validation of transactions. Which on the one hand, offers improved fluidity and a higher transaction rate and, on the other hand, eliminates the bottlenecks associated with the central authority and leads to a significant reduction in costs.<\/p>\n

But in addition, the distributed trust model, based on the blockchain community, is much more scalable and capable of handling the complexity of a hyperconnected society where the volume of interactions is multiplying at such a speed that it makes it impossible, without prohibitive costs, to guarantee the security and integrity of the system in a centralized way. As the law of diminishing returns reminds us: beyond a certain threshold of complexity, the greater the means, the more dysfunctional the system.<\/p>\n

As Deloitte points out very well, in its excellent article <\/a>on blockchain “beyond creating efficiencies by eliminating the legal and financial intermediary in a contractual agreement, blockchain is taking on the role of guardian of trust and provider of transparency. In the emerging Trust Economy<\/em>, in which a company’s assets or an individual’s online identity and reputation are becoming increasingly valuable and vulnerable, the latter use case may be blockchain’s most potentially valuable to date.”<\/p>\n

For all of the above, Blockchain as a foundational technology has the potential to change the way of buying and selling, interacting with the government or at a commercial level verifying the authenticity of any transaction, validating the ownership of an asset or the authorship of content. Blockchain combines the openness of the internet with the security of cryptography to give everyone a faster and more secure way to verify key information and establish trust without the need for existing trust protocols such as banking systems, credit rating agencies, and legal instruments that make transactions between parties possible.<\/p>\n

The emergence of the Internet has demonstrated the effectiveness of a decentralized communication system, free from the limitations of a centralized telecommunications operator. A new open, distributed, and shared TCP\/IP communications protocol, new code for content definition (HTML), and a new network services architecture (JAVA) made it possible to connect to any network, create and share information openly and in a matter of seconds.<\/p>\n

Similarly, Blockchain is at the forefront of a technological revolution that will make a new trust economy possible. Allowing individuals to carry out transactions with each other, of an economic or social nature, safely and irrevocably without the need for a third party (banks or institutions) to guarantee trust. Its distributed, open and secure database and encrypted consensus trust protocol will make it possible to transfer any value openly and securely and in a matter of seconds from anywhere and on any device.<\/p>\n

Where to start?<\/h3>\n

Will blockchain affect your organization or business? I honestly believe that it is only a matter of time hence the importance of starting to familiarize yourself with the technology and explore the implications in your specific sector. A good practical way to start is by asking Google. That is, looking for startups in your sector that are launching applications based on blockchain technology. As an example, this map of the financial sector, which as you might expect is the most active at the moment.<\/p>\n

Another low-risk approach is to internally use blockchain as a database for applications such as physical and digital asset management, internal transaction registration, or identity verification. This can be an especially useful solution if your company is having trouble reconciling multiple internal databases. Testing single-use apps will help you develop the skills you need to tackle more advanced apps. These experiences can already be done with minor investments, since new organizations such as Ethereun or companies such as Amazon or Microsoft, offer you Blockchain as a service, so you can innovate without having to invest in the platform.<\/p>\n

While blockchain as a foundational technology has the potential to create the “internet of value” and lay new foundations for our economic and social systems, just as the internet has, its adoption will take decades. As an example, my personal experience with Sun’s vision that in 1995 was “The network is the computer”, I have had to wait two decades to see it become a reality as services in the “cloud”. It is therefore to be expected that the process of adopting blockchain will be gradual and constant, not sudden, it will be consolidated as the technological and institutional transformations necessary to develop its potential gain momentum. But experience has also taught us that when it comes to innovating it is better to ask for forgiveness than to ask for permission. Do you dare to try it?[\/vc_column_text][\/vc_column][\/vc_row]\n","protected":false},"excerpt":{"rendered":"

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