Digital Watch

I’m writing this from somewhere in the guts of a house sale and purchase, fingers crossed, touching wood etc. It’s an extremely fortunate position to be in, so this is definitely not a moan about personal admin, nor a pitch for how smart contracts and digital identities could drive efficiencies in conveyancing. There are (plenty of – enjoy!) more considered views on that topic. Still, I know what you’re thinking – what better time to get to grips with distributed ledgers? (It’s also a natural follow up to last month’s reflections on the underlying value of cryptocurrency.)

…or maybe that’s not what you’re thinking and you find yourself glazing over at yet another mention of blockchain technology. I can identify with that, and felt a bit alone until I read this interview with Edward Snowden. He reminds us that ‘the applications [of blockchain] are all variations on a single theme: verifiable accounting. Hot.’

Who signs up for a conversation about verifiable accounting? Maybe too few of us. Because the institutions which hold and maintain records have traditionally been conferred with trust and power. These are human constructs we all have a stake in understanding. So if technology is changing how we conceive of and apply them, that’s a pretty big deal.

Let’s consider one record-keeping entity, a bank. Banks only function because of the trust we place in them and when that fails things quickly go awry. While it’s not true to say that distributed ledgers eliminate the role of trust in transactions, they do change why and how we can be confident, effectively by creating a set of conditions under which there can be only one version of the truth¹.

Distributed ledgers spotlight the importance of transparency, while trust takes a back seat. Where might this take us? One urgent application for this technology could be using data gathering and smart contracts to fight climate change. This is a problem requiring transparency (the data around which the smart contracts are built) as well as trust (no inputs to be hidden from the ledger), and collaboration (getting to a shared national / global approach). It’s important we don’t conflate these concepts and assume that transparency is sufficient for trust, that it necessarily generates trust, or that trust and co-operation are equivalent concepts.

Those who think about trust a lot seem to broadly agree that trust relates to risk. To trust is, to an extent, to take a risk. Being confident in the accuracy of our collective records might make us feel like some risks are better understood, or being managed – and so in this sense, we may feel we need to rely on trust less. But a fixation on data capture can’t, and shouldn’t, prevent us from taking leaps into the unknown.

¹ There is a bit of nuance here; any external inputs fed into a distributed ledger could still be false or erroneous!