Using Trust-Based Technology to Make Our Systems More Inclusive
Rachel Botsman, trust expert and author of “Who Can You Trust? How Technology Brought Us Together and Why It Might Drive Us Apart” recently sat down for an hourlong interview with Reinvent to discuss the paradox of the erosion of institutional trust and the growth of the sharing economy.
I sort of became obsessed with understanding how strangers could trust one another through technology. Not just in the context of sharing marketplaces, but also on the dark web, which I find fascinating. You can have so-called untrustworthy people, and then you have the assistance of accountability, and it changes who has power in that marketplace, so the consumer suddenly has a lot of power. Then while researching that, there was this whole other thread or hunch developing around the global implosion of trust. You can’t open the paper these days without seeing that trust is being eroded in some kind of major institution.
I started to wonder if these two things were connected, like how on one hand you have people placing their faith in strangers and placing their faith in technologies and on the other hand you see this erosion of trust. The way my brain works is I’m always looking for structural shifts. If technology has this impact on human behavior, how does that structurally change things? I started thinking five years ago that something profound was happening to trust in the world. I just didn’t know quite what it was back then.
I actually did not like the narrative that trust is in crisis because I think what it does is it further erodes people’s confidence and faith in the system. I think even the narrative in and of itself is a problem.
The other issue I take with this whole notion of trust in crisis is that trust is so contextual. When you ask people, “Do you distrust the media,” and you don’t even say what kind of media it is or which journal it is—[this is the problem with] the narrative that we’ve got stuck in around institutions.
I think what is actually going on is that the way institutions think about trust, that’s what’s technology is disrupting. Institutions still think that trust is something…that can be controlled by the top, and it’s something that’s very hierarchal, and that we still look upwards to experts, and referees, and regulators, and authorities. That’s what I think is being disrupted. The principles or trust, the rules of trust if you like, are changing.
Will blockchain transform the sharing economy? Maybe someday, says Botsman, but platforms aren’t going anywhere just yet.
With Airbnb, you can have so much trust that exists between the individuals, but we still feel like we need the platform to broker the payment, to confirm the booking, to manage the guarantee or the insurance contract. The thinking is, will the platforms become these redundant intermediaries because we can actually manage that risk and that value directly on the blockchain. I could put my house on the blockchain, and then you could rent it, and whatever it is, 8% to 10% would need to go to the platform itself. I still think it’s a long way off .
Human beings naturally look for a center, they naturally look for some kind of leader or hierarchy, particularly when things break down.
What happens there is that you have to have collective responsibility of the behaviors of people. I think it could happen, but I think it’s stretched too far because even with traditional platforms, we have issues when things go wrong. I personally don’t believe systems can be completely decentralized. I think human beings, they naturally look for a center, they naturally look for some kind of leader or hierarchy, particularly when things break down.
The extreme example of this is what they call the “decentralized autonomous organization”—talk about jargon—where they wanted to see whether you could create an organization without a board or without any kind of leadership structure, so they created a venture fund that would basically automate funds based on votes of the crowd. The fund got hacked into, and was stolen, and it was actually a loophole in the code. What was interesting is if you followed the online blogs, they were all calling for the guys that created it to fix the problem.
When asked what aspects of our society she thinks are moving in a positive direction, Botsman says she thinks the fact that this conversation about trust is happening at all is a positive development. While she is apprehensive about the increasing intrusion of AIs like Amazon’s Alexa into our lives—“how can I trust that her intentions aren’t purely commercial,” Bostman asks—she also sees in the current moment an opportunity to reinvent our system for the better.
I think it’s three things. The first one I should say is even realizing that trust is an asset. I think this is a generational thing that it’s something that we took for granted, but it’s in fact very fragile. When trust dissipates from a society, it creates a very dangerous vacuum. Even the conversation around it is healthy, that we see this as something that we need to protect and that it’s not just an attribute and it’s not just a resource that will take care of itself. A healthy society is a trusting society. I think that this conversation started is a really good thing.
The second thing is that I believe that this is the window of opportunity to really redesign the systems themselves. It goes back to our conversation around scale, that we’ve lost sight of people’s real needs, and that if you redesign the system so they actually serve people’s needs first, it starts to look very different. How we use this moment of crisis to properly redesign systems, like education systems, voting systems, health systems, payment systems, education systems, whatever it is. Something that we need and delivers value in our life and that you can apply different principles to, that I think is really interesting.
Then linked to that, I think when we get it right—let’s face it, I live in a bubble, you live in a bubble, we live in a very privileged bubble. There are a lot of people, within institutional systems, they’re left out. There are a lot of good people who look bad by our so-called gold standards of trust. There are a lot of people who don’t have credit histories. There are a lot of people that will come out the wrong way in a criminal background check. You look at what’s happening with emerging markets where they’re saying, okay, there are all different ways to assess how someone might behave in the future. There are always different ways, for example, to assess someone’s propensity to pay. We can actually look at the data that exists in their network. We can look at how trustworthy they are in really interesting ways and that I think could lead to really interesting examples that are more inclusive.
Just to bring this to life, a really good example of this is a company called Tradey. They’re looking at reputation data as it associates to risk and how could they change risk profiling of traditional insurance companies. Where it becomes really interesting is they’re looking at situations where misinformation gives one side a lot of power. The example I like to use is landlord and tenant bonds. When you go to rent a property, you end up paying three to four months’ rent because that landlord doesn’t know how you’re going to behave and then you often don’t get the bond back.
If we get this right and we use technology in the right way, it could really unlock opportunities for people to make these systems far more inclusive.
But if you could actually prove that you have a good propensity to pay and that you are someone who is trustworthy around property, you can reduce that risk. Once you start thinking that way—for example, they’re looking now at women who stay in domestic abuse situations because they’re so worried about that first month’s rent because they don’t have their own credit histories. There are so many other ways now to demonstrate that you are trustworthy. If we get this right and we use technology in the right way, it could really unlock opportunities for people to make these systems far more inclusive.
