Lots of words are being used in tandem with the blockchain and trust. Decentralising trust, Re-intermediaton of trust, Shifting of trust, Unbundling trust, Reassigning trust, Earning trust, Delivering trust and Distributing trust. The effect of the shift in handling trust may surpass the earlier two milestones being the advent of double entry book keeping and the implementation of the 1933 and 1934 securities acts in the United States.
Double entry bookkeeping can be traced back to AD 634-644 when Muslim civilizations had adopted written accounting, reporting and auditing systems for the regulation of the zakat. Records in AD 976 show receipts recorded on the right hand page and payments on the left hand page, with conditions to exclude later tampering.
Even in these early days trust issues drove the age old problems of financial record-keeping.
What is disruptive about the blockchain entering into record keeping is that it not only records the transactions but it shifts the onus of trust away from institutions, policy makers, banks, large corporations and governments. Avid supporters of the blockchain believe trust should be liberated and not remain with the entities that levy taxes, charge license fees, supervise it and control it. Blockchain supporters believe trust should be facilitated in one to one relationships by the technology that can evidence and enforce it. Trust in this case is evidenced in a network of trusted computers that house cryptographic proof of the peer to peer transactions that have taken place.
What scares banks and other trusted intermediaries is that much of their role will disappear if they are not seen as the bastions of trust. Already as we have moved from a physical to a digital world we have seen the design of banks change dramatically. They have become small shops housing not much more than a few ATM’s and two meeting rooms instead of huge Roman like columns and huge safes to store physical money.
In William Ougayar’s recent blockchain Book “THE BUSINESS BLOCKCHAIN” he lists seven principles that we will need to believe in, if we are to believe in the future of decentralised trust. Summarising them that are as follows:
- It is a re-intermediaton of trust
- It is trust being unbundled and reassigned
- The blockchain shifts trust it doesn’t eliminate it
- By trusting blockchain it trust its earnt and delivered differently but still needed.
- Trust is decentralised to multiple entities
- The cost of delivering trust is distributed and lower
- Distributed trust will bring us together
Blockchain technology will become the new way to record the trading and tracking of financial assets. I believe this leap forward will have more impact than advent of double entry book keeping and the implementation of the 1933 and 1934 securities acts in the United States because it shifts trust by embedding it in the transactions at a decentralised level. No intermediaries, lower cost, more transparency, more efficiency and you can do it all on your phone.