Can We Build Societal Trust in Blockchain?
Trust is a powerful currency. Trust research in information systems described trust as a primary predictor of technology usage and a fundamental construct for understanding user perceptions of technology. Initial trust formation was a study focus because users must overcome perceptions of risk and uncertainty before using a novel technology.
However, technology is underperforming when it comes to gaining people’s trust even though it is the chief industry standard for trust. So while the importance of trust is becoming more dependent on complex, often invisible, connected technologies, people instinctively distrust these things simply because they cannot see, touch or understand it. Regrettably, big data and technology companies and cases like the Facebook data privacy scandal made it worse by reducing the notion of trust to a commodity in business, much to public outcry.
This becomes problematic for adoption of emerging technologies like blockchain because they can actually offer a range of benefits such as improved accuracy, better quality and cost efficiencies for businesses in every sector. In other words, blockchain can enhance trust and reliability in operations and financial processes, which is crucial for sustainable success. Yet there lies the paradox that the very solutions for better managing risk, increasing transparency and building confidence are often themselves the source of (perceived) new risks.
Trust as a Barrier to Blockchain
Blockchain in particular has the ability to generate trust in processes by removing the need for central aggregators or intermediaries, improving data integrity, and increasing transparency and control to stakeholders in a digital environment.
On the one hand, there is technology risk involved: this consists of challenges in the technical sense, such as code integrity and cybersecurity, as well as challenges in the more macro sense of implementing blockchain solutions, like a lack of standardization in protocols, and inconsistent regulation and legislation among others.
All those aside, we should come to acknowledge that even though blockchain can create trust, it does not remove the need for assurance in the process itself, since that is not how we as complex social beings work. We are affected by what we see and hear in the media or from people that we know, regardless of the information’s accuracy, and we are quick to draw associations or make impressions and judgement, all of which affects our receptivity towards something relatively unknown to ourselves. In other words the ‘human’ factor of trust is a subjective experience that has to be built.
The bottomline is that there are a number of external determinants or ‘trusting bases’ that could shape people’s trust in an emerging technology like blockchain, which is key to its acceptance and uptake. To mitigate the perceived risks in order to realize potential benefits, we must be open to adopting blockchain while applying the right framework and even governance that provide trust and confidence.
How Trust is Implemented in Society
The reality of the social world is that trust has to be built over time, and is dependent not only on one’s trustworthiness but also on the connections one makes that can endorse said quality. While we live within individualistic cultures, self-identity is relative and is validated by our social interactions as proven with the cancel culture today. The greater the quantity and/or quality of interactions, the better the reputation.
In the same line of thought of social validation, society has a way of policing itself. Communities digital or otherwise are predisposed to autonomously maintain order and settle disputes. Community members contribute to the ecosystem by propagating useful information and resources, separating the good from the bad, and creating social rules to govern interactions. ‘Good’ actors are rewarded, whereas ‘bad’ actors are condemned.
When talking about regulation in a non-legal, common sense, we could utilize the natural mechanism that already governs our social behaviours as a framework to build confidence in blockchain and its community. It will also be critical to ensure that individuals act in the interest of the collective community.
A Framework for Cultivating Trust in the Blockchain Community
The Novum Trust Order (NTO) Protocol has taken the concepts of reputation-building and self-policing and created a simple solution.
One thing that our team has found while working with new entrants of the blockchain industry is that these people are evidently unfamiliar with blockchain and unsure of who or what they can trust. Having been in the blockchain space for quite some time, we want to kickstart the process of guiding new blockchain users to navigate the space with greater confidence.
Authority Scoring
A credit score is a relative, arbitrary number that depicts a consumer’s creditworthiness, and is based upon credit history. Third parties, like banks and credit card companies, use it to evaluate an individual and assess the risk of lending that individual money. Similarly, the Social Credit System was launched in China for the establishment of a unified record system for parties to be tracked and evaluated for trustworthiness. The system regulation of social behaviour is based primarily on blacklisting and whitelisting, in addition to a reward and punishment mechanism.
The functionality of credit scoring motivates individuals to be more mindful of and accountable for their behaviours, to abide by what is socially acceptable, and promote desirable moral values. With NTO Protocol, an authority score or ‘Trust Score’ will be assigned to each crypto-wallet address on the network. Each wallet address serves as an identifier consisting of a particular string of alphanumeric characters representing possible destinations for any given crypto transaction. Trust Scores are derived from multiple variables including wallet transactions, the value of interactions and disputes, if any. Scores of users and entities on the network are open to contest and policed by the community itself.
Having such a scoring system encourages desirable behaviour since higher-rated accounts naturally attract more people to transact with those who have proven to be reliable and active in the space. We want to cultivate a reputation system comparable to the traditional way of forming trust in businesses.
Validators
Additionally, there needs to be other measures to ensure the community acts in the network’s interest and to keep bad actors in check, and this responsibility has to be distributed and managed by the community itself.
The popular Proof of Stake (PoS) model, where parties actually stake tokens to show they have skin in the game, ensures staking parties act in the interest of the network as a partial stakeholder. Optimizing on PoS, our version of Proof of Authority (PoA) consensus leverages identity as the form of stake rather than actual staking tokens, which is more suitable in our case. This alternative means that invested parties stake their reputation, which cost them invaluable time and effort to grow. These invested parties putting their reputation on the line are known as validators, who help maintain the order of the ecosystem.
In NTO, validators are smart contract owners (wallets that create or hold ownership to interact with a given smart contract) and wallets with high authority scores. Only users with the top percentage of Trust Scores qualify as Wallet Validators. These validators will then have to be approved before being given privileges with regard to maintaining the network.
With a quorum, wallets can sign transactions to report wallets or smart contracts that are involved with malicious activities, flagging them to other users on the network. Validators will be able to report a wallet or smart contract without reaching quorum.
In securing the interests of network participants, especially those with genuine interests in proper utilization of blockchain data and resources, this form of regulation could work to propagate more optimal usage of blockchain while targeting troll behaviour. Combining elements of consensus and authority scoring and capitalizing on stakeholders’ participation, the blockchain ecosystem is likely to generate more productive behaviour on the network while penalizing malicious behaviour, simply because of the power of the community and the importance of social validation.
