Can Distributed Ledger Technology Change the Culture of Mistrust?

By Glenn McPherson, Managing Director of NetApp, ANZ

I recently saw a video making the rounds on social media in which former US president Barack Obama appeared to share candid thoughts about everything from President Donald Trump to The Black Panther movie.   

The man in the video looked and sounded just like him. But none of it was real.

Using editing and face-swapping software, the video’s creators made a point to remind us that new technology can easily be used to propagate misinformation - not that we needed another example. From the Cambridge Analytica scandal to the banking Royal Commission, mistrust is brewing across our cultural, economic and political spheres. Whether it’s an online video with millions of views or a targeted Facebook ad, it seems we can no longer trust our own eyes. The term ‘fake news’ earned Word of the Year titles in 2017 and 2016 and this year’s global Trust Barometer survey found widespread distrust in government and media.

Clearly, we’re all suffering from a few trust issues.  

With this mistrust has come a dose of technology skepticism, particularly in emerging areas such as cryptocurrencies and blockchain. But could new innovation like distributed ledgers actually reverse the trend? It turns out this technology not only has the potential to fundamentally transform industries and applications but also to usher in a new era of trust.    

The evolution of trust

Distributed ledgers manufacture trust in the same way that banks, governments, lawyers and accountants have done for hundreds of years - by creating records and processes that people can agree and rely upon. Traditional institutions of trust we know today were built over time on advancements such as seals, vaults, copies, and signatures. Now, we have a few new options.

It began with transactions, with cryptocurrencies like Bitcoin showing that we don’t actually need traditional governments or monetary bodies to create money or to maintain financial order. In fact, the energy required to mine ‘coins’ ensures that no one person can dominate the system. 

Furthermore, the transparency of the transactions ensures you can be sure exactly which wallet owns or owned a coin at any point in time. In this way, no person or entity can forge money or spend the same coin twice. All of a sudden, we don’t require a government-run organisation to police transactions or ensure banks aren’t cooking the books.

This revolutionary idea has continued to evolve for other applications, including storing information and assets. For instance, one of the best uses of a distributed ledger is to track the chain of custody of an asset, without needing a central register of trust. 

This enables users or entities to identify exactly who owned or possessed an item through its entire history. When you think about it, a distributed ledger is perfect for real estate transactions and would offer greater assurance than a deed that could, theoretically, be copied or forged. Familiar features such as conveyancing, stamp duty and land registers, which have been central to legal certainty over the last thousand years, might no longer be necessary. Distributed ledger technology could also provide much-needed upgrades to the way we manage identifies and documents such as drivers’ licenses or passports - bringing the clarity of real-time information to the authorities. 

The next iteration of distributed ledger technology is already in the works and poised to further disrupt the old institutions of trust. Money and assets managed in ledgers require new infrastructures to facilitate trades and swaps. Now, smart contracts allow for computer protocols to stand in place of an external third party to bring greater trust to these transactions. 

In time, the technology could change the way we finalise everyday business agreements and even vote in political elections. Finally, we’ll see the emergence of markets to match buyers and sellers in this new ecosystem - all of it built with speed and fairness at its core. This has implications for further uses across gaming, auctions, patents and even stock markets - essentially any application in which it matters who was ‘there’ first.

A trustworthy future

All of these advancements undermine many of the roles of traditional trust brokers on which we’ve relied for so long. But the result is greater trust, not less. Distributed ledger technology allows us to set up new systems of trust in ad-hoc ways between people who have never met or worked with one another.

These new systems have the potential to dramatically reduce the cost of transactions and create entirely new models of consumption. For instance, we use digital platforms like Spotify or the Apple iTunes Store to facilitate transactions and purchase music, books and movies. 

With distributed ledger technology, it might be possible to do business directly with content creators, developers and artists, without an online platform acting as broker, offering a new level of authenticity to our preferred content. We can expect to see an erosion of the traditional buy and sell relationships in favour of “exchanges” that tip the balance of power away from massive corporations and toward millions of peers working individually but also as one.

Of course, there is still a long way to go and these revolutionary changes will require placing a great deal of faith in the programmers who create this new virtual infrastructure. Fairness, speed and security will be the krux of innovation.

But it’s nice to imagine this version of the future. A future in which we can organise and verify the authenticity of the data we use to shape our opinions, and make better informed decisions as a result.

That’s the future I’d prefer to see with my own two eyes. 

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