Blockchains Are Only as Trustworthy as the Data Entered Into Them
Across the universe of blockchain projects, many people have made claims regarding the trust that the blockchain enables.
There seems to be an idea that, because we can trace the entire history of the data entered, it’s impossible to lie.
This is simply not true.
If your mango has a blockchain record saying that it’s organic, all that means is that somewhere someone entered that data. Once it’s entered, it can’t be changed, but that doesn’t mean the initial data was accurate.
I’ve said for a long time that if blockchain becomes a dominant force in the world, many of today’s “middlemen” will move into verification roles.
Take for example a blockchain-based lending platform. We can decentralize the entire process of getting a loan now, but how does a lender know if they can trust the borrower?
Once there are existing blockchain-based transactions that would essentially amount to a credit history, you could just check the on-chain records. Until then, someone needs to do some kind of credit check, financial review, etc.
Another example is ride-sharing. A “decentralized Uber” was one of the most popular examples that people used to describe Ethereum smart contracts early on.
One important role that (we hope) Uber fulfills is to verify that the drivers they allow onto the platform are certified and of a certain quality. In a decentralized environment, who does this? Someone will need to do it.
If I’m right about where we are at in the hype cycle, a couple of years from now, you will begin to see well-reasoned blockchain products come to market that recognize the technology’s real strengths and weaknesses.
Until then, keep your eyes open for things that appear to be too magical.