The matter of trust seems have settled at the centre of things of late.
Trust. That bond which friends want to assume, lawyers try to encode, political parties wish to project and of which government fear the loss. Trust, a nebulous and fleeting concept which we all seek but cannot define. Trust, a virtue which we all self-imbue, even those who delude themselves.
Trust is in the news, daily. From the fake news storms of the alt-right in the US and the smoky digital sweatshops of Russia. From the lies of Trump to the evasions of Zuma to the inscrutable mechanisms of central bankers to the dark arts of corporate financiers. In the world in which we all meander through on a daily basis, we lean on mechanisms and institutions of trust continually. Merchants do not trust us, but they trust the financial system which issued us our credit cards. A stranger will accept a R20 note from me, not because he trusts me, but because the central bank has given him a legal guarantee that the paper will be accepted as legal tender. You will not sell me a house without a conveyencer in the middle. In almost every exchange of goods and services, other than those between friends, there is a third party that acts as trustee (in the corpus of either an individual or institution). And this is the rub - the trustee is not always trustworthy, either through hackability or incompetence or dishonesty or fair rent-seeking/taxation or simply the arbitrary damage of unpredictable events. Into this reality a new technology has been borne. It is called blockchain, and it was first developed by a possibly pseudonymous programmer called Satohsi Nakamato, the architecture of which now sits solidly at the beating heart of cryptocurrencies like Bitcoin and Ether, and involves a loosely co-operating network of tens of thousands of computers owned by private individuals and companies.
Blockchain’s great genius rests on the following principles: 1) Transactions processed by the blockhain are public. The more people (or, more accurately, their computers) see the same transaction, the more trustworthy the transaction details are. In an earlier age - if a whole village heard a man make a promise-to-pay, the payer could not later repudiate it, too many people heard the promise. This is the same principle updated to the network age. 2) The transaction cannot be tampered or changed, either with the regards to content or time-of-transaction. This is given effect by an advanced non-reversible cryptographic technique called digital signatures. And even if one computer was compromised, it would be near-impossible to compromise thousands or more.
And so, using blockchain, the entire magisterium of trust has been moved into a public computer network, operating openly, with no single failure point and no possibility of tampering with a transaction. Furthermore, while the initial Bitcoin blockchain simply carried numbers (or ‘cryptograms’) that represented a token of exchange, the newer blockchain initiatives now carry mortgage documents, contracts, stock certificates, etc. All imbued with the unassailable trust baked into the DNA of the architecture. And possible applications are endless. This blog started with a comment about fake news. Imagine a media blockchain that secures and carries the news, videos, photographs from legitimate sources like the New York Tiimes. They can no longer be disturbed, and the trust in their veracity rises exponentially. Blockchain will change the world. It will (and in the case of Bitcoin) disrupt and dissolve many central trusted authorities.
The stolid world of exchange have to adapt, because it cannot be stopped.