Blockchain: Re-Discovery of Trust
Author’s Note: I promised you at the very beginning of my series on Blockchain that I wanted to share with you why I think it is a revolutionary idea. In this non-technical post, I get right into this. It is not about cryptocurrencies, it is not about Metaverse, though without Blockchain neither would exist. It is something much deeper and much closer to Humanity. It is about something from our past, and potentially everything about our future. It is something we care very much about having, and are also very scared of losing.
Over the course of last 5 posts, we have gone through several mechanisms employed by Blockchain to achieve —
- Immutability in content and in sequence
- Transparency by Duplication
- Verifiability by Decentralized Chain Verification Protocol
But why are Blockchains designed with these features? To answer this, we are going to look into our own history, our progress and the value of Trust.
Humanity, Trade & Trust
None of us doubt the importance of Trade in our lives. It has been very well studied that humanity’s progress perfectly coincides with the evolution of trade. According to Yuval Noah Harari’s Sapiens -
…the fact is that no animal other than Sapiens engages in trade …
…trade cannot exist without trust, and it is very difficult to trust strangers…
…when two strangers in a tribal society want to
trade, they will often establish trust by appealing to a common god, mythical ancestor or totem animal…
The excerpts above highlight three extremely important ideas, lets call them the 3 tenets of Trade —
- Only Humans trade
- Trade requires trust
- Trust is established using a common higher authority
Trade and Trust
One of the earliest form of trade was Gift Economy. Social norms and Honor System dictated future reciprocation, and it works really well in smaller groups. It works on Trust, we trust our friends & family to support us in need, sometimes even our closest neighbors.
Another form of trade was Barter Economy — immediate exchange of goods & services. Value of goods dictated the terms of trade, bags of grain could be exchanged for building a house. This works on Trust too, verifiable trust, you could check with your own eyes the quality of grain, or the size of the bag.
Trust and Higher Authority
As societies became bigger and trade networks larger, maintenance of Trust became difficult. So Humans, in their eternal pursuit to trade, created superhuman authorities to be the keepers of Trust. Harari notes
…religion has been the third great unifier of humankind…all social orders and hierarchies are imagined, they are all fragile, and the larger the society, the more fragile it is…. a crucial historical role of religion has been to give superhuman legitimacy to these fragile structures…
Superhuman legitimacy allowed humans to Trust strangers, as long as they believed in a common superhuman law — the same religion. And this rise of common faith allowed trade to flourish, because Trust flourished!
Money & Common Authority
Strangers in modern world trade with absolutely anyone, it doesn’t matter if we speak their language or believe in the Gods. Because we still believe in a new common superhuman entity — Money!
Money at its core, is a vehicle of Trust. Specifically, you trust Money to have the following features -
- Be a medium of exchange, trust that everyone will exchange money for goods and/or services
- Be a unit of measure, trust that amount of money can be used to measure the amount of goods and/or services
- Be a store of value, trust that the value will not erode overnight
Money is a human construct, completely artificial, God’s didn’t create Money, neither did nature. But we trust Money so much, that we are willing to spend our lives chasing it. Why do we trust Money?
Who Empowers Money?
All Money that exist today are Fiat Money, meaning they are backed by the Government. Governments guarantee the 3 features of Money, and we Trust our Governments to uphold their promise.
Going back to our 3 Tenets of Trade, Money allows Humans to trade because we have created a Common Higher Authority called Government and we established Trust using Governments. In that sense, Money is nothing but a token of Trust in the Government.
The Variable in the Tenets
In the 3 Tenets of Trade, we find a striking insight. The first two tenets are fixed truths, constants if you will.
- Only Humans trade. Even our closest relative species, the Neanderthals, didn’t trade; they are likely extinct because they didn’t trade.
- Trade exists when Trust exists. In absence of Trust, Trade withers.
But there is something quirky about the 3ʳᵈ Tenet, it introduces a variability in how we establish trust. Humans have used different forms of Common Higher Authority (CHA) to establish trust, reflecting the societal progression over time: Honor System, Religion & local laws, Governments & Human Rights
CHA evolves with time but there runs a commonality throughout the evolution. Honor System, Religion and Government all enable laws that lead to social order, put protocols in place that ensure laws are upheld and law breakers are punished. Laws are stable as they cannot be randomly modified. Laws are usually public knowledge, hence transparent. Laws are verified by central authorities, the family patriarch, God or their prophets, Governments. For the size of its society, CHA is a protocol to ensure Stability, Transparency & Verifiability — ergo Trust!
Common Higher Authority for a Digital World
We are in a technological world connected by the World Wide Web, a Digital World where the notions of national boundaries are blurring. Trade is not just about exchange of goods & services but also the exchange of data and information now. In this domain, the current forms of CHAs are proving to be inadequate. Trust over the Internet is rapidly decaying. And, if Trust dies, Trade dies, and with it Humanity dies.
So we need a new establishment to re-discover Trust, to flourish and to let his progression of Humanity to continue on its path in a world so interconnected. Could Blockchain serve as a potential candidate to the new CHA?
Maybe! Blockchains are —
- Stable or Immutable, it is computationally impossible to modify the chain
- Transparent, because Duplication allows anyone to download a copy
- Verifiable, the mathematics of Hashing is quite easy to be verified
In Conclusion
The idea that Blockchain can serve as a Common Higher Authority in a digital world to establish trust isn’t far-fetched. We are already seeing this in action. Blockchains have helped —
- create digital currencies like Bitcoin, tokens of Trust
- execute Smart Contracts between strangers on Internet, encoding of Trust
- prosper the trade of digital files using NFTs, result of Trust
- expand the exchange of data and information using dApps, result of Trust
All of this culminates into the eventual idea of Metaverse, a world beyond physical reality. For the optimists, it is the next step in evolution for Humanity. But none of it would be possible without our ability to Trust the Digital World. Thankfully through Blockchains, we have discovered a way to establish this Trust.
And that is why Blockchains are revolutionary!
Footnote for the skeptics…
The Blockchain revolution doesn’t mean an end to existing structures of the society. It is naive to think that we can replace existing CHAs with technology. When societies moved to Governments, Religion didn’t die, neither did the Honor System, they exist today, perhaps in more powerful forms than past. Each CHA has its own value proposition, so they will exist even in the world of Blockchains. It is the Digital World that needs Blockchains, CHAs of the Physical World will just accommodate the new player in town.
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