Blockchain Technology and Our Trustless Society
Once upon a time, Americans relied on the social and economic institutions charged with protecting our money and freedom to actually to keep our money safe and protect us from oppression. Then, there was the 2000 presidential election, the Great Recession of 2008, and the 2016 presidential election — all of which represented landmark failures in our once trustworthy political and economic institutions. Whether it was a response to these major setbacks or not, in the time since tech innovators have developed blockchain technology as a workaround to the failures of our trustless society.
Trust is Tricky
For the most part, people behave as they should. But nobody’s perfect, and it’s really just a matter of time until somebody does something that places individual interest over the good of the collective. It’s human nature and arguably the basis of survival.
Trust is tricky because it requires hoping people will act a certain way while knowing full well that their choices are their own. Maintaining freedom of choice means that sometimes we will make decisions that benefit ourselves at the cost of others. But this is not an argument for greater altruism in human society — it’s a discussion about how we are starting to design technological tools that reflect our intellectual and moral constraints.
Ideally, none of us would ever have to struggle with the ethical quandary created when self-interest lands on the opposite side as social benefit. Unfortunately, however, this is something we have to deal with every day. And for the most part, the people we have trusted to prioritize our collective needs over individual greed are just not coming through for us.
Building Societies on the Bonds of Trust
Ever since forming society, humans have trusted each other to place the collective everyday interests ahead of everything else. We make rules and laws with the expectation that they will be followed despite temptation otherwise. We put trust in governments to ensure they will prevent harm or abuse to the extent they can. But weakness and opportunism are part of the human experience, and there is simply no reason to trust that our political and economics leaders will not fall subject to their pressures. In fact, some of us are reasonably concerned that our political and economic institutions are doing more harm than good.
In fact, Millennials like me and the Gen-Zers who are coming up behind have little reason to trust the institutions that many of our parents promised would be there for us. Rather, we are living in an increasingly trustless society — and this is not necessarily a bad thing.
Our Trustless Society
Irresponsible behavior among the most respected financial institutions in the world led to a mortgage crisis that caused millions of families to lose their homes and flung the world into a financial crisis. Why this all occurred is more than clear in retrospect, and it taught many of us a valuable lesson about trusting the institutions meant to uphold our financial system — that is, just don’t.
The people that are now buying homes financed by the same banks that foreclosed on millions of people just like us merely a decade ago also grew up under governments led by two presidents elected to office despite losing the popular vote. We are paying into a social security system that will not be there to support us when we have aged out of the work force. Our political and economic freedoms are crumbing away under our feet, and our formalized institutions are doing little to stop it.
Like other illusions, the two key ideals that underlie what so many of us consider the American dream — democracy and economic freedom — are fading away the closer we get to them. The repercussions of the ongoing failures of our political and economic institutions are reverberating in our economy and are echoing even more loudly in the collective consciousness of the American youth. It’s a real existential downer. But what if we could eliminate — or at least work around — the failing financial and political institutions that once formed the foundation of modern society?
Moving On From a Trust-Based Society
Trust has always been the imprint of our human nature in interactions within a civil society. Trust facilitates cooperation between organizations in the larger reality of uncertainty. We engage with the expectation that our own benevolent motives will be met with positive intentions, behavior, and outcomes of another. After all, it’s best for everyone to act in the benefit of the collective.
But humans are tricky, and we don’t always act according to rational calculations. Indeed, we are among the most unpredictable animals on the species — certainly not something to be unconditionally trusted. This is a problem, and fortunately technological innovators are developing solutions to the problems created by the institutions that have betrayed our trust. These measures are not punitive, and they’re not meant to affect anyone’s exercise of free will. Rather, they are meant to work around the fact that humans and the institutions that we build simply cannot be trusted.
Blockchain technology stands out from the crowded innovation space because it is trustless. When designed properly, blockchain ledgers and smart contracts can ensure promises made are carried out properly irrespective of incentives to the contrary. Aside from a major technological innovation, blockchain technology is helping us build a society that eliminates trust from many social and economic exchanges, resulting in a better world for us all.
Blockchain Tech and Trustlessness
Blockchain technology allows individuals to free themselves from institutions and the logical paradox associated with being forced to trust them. Instead, people place their trust in a community of individuals that are following the rules established by computing laws that can only be altered by an actual majority vote.
Blockchain is a distributed ledger technology with no central government or authority responsible for it. It is used in open technology to carry out private transactions, and it challenges centralized intuitions that have traditionally held a monopoly on society’s trust by using a peer-to-peer system without central authority.
Transactions, information, property, or anything else on the blockchain cannot be owned by two people at the same time simply by nature of its design, which ensures engagements can move forward without any requirement for trust. In addition to this autonomous validation function, the blockchain can guarantee authenticity because the technology relies on members of the community — its users — to use this open technology to do something private.
Building a Trustless Society
In decentralized blockchain transactions, every participant has a full copy of the ledger and they work collectively to validate updates to the chain. The information in a block is permanent and visible with encryption technology that ensures security independent of unreliable third party intermediaries. Thus, users have full transparency, which keeps each participant accountable for his or actions during the process. This stands in stark contrast to traditional governing bodies or institutions, which tend to have low transparency and high autonomy — an environment that provides clear incentives for breaking rules. In this manner, blockchain technology avoids the need for a “trusted” third-party to regulate social, political, or economic activity.
Blockchain tech has opened the door for people to become self-regulating in an otherwise trustless environment. Trust, the very same that society has had in our governing bodies, is not required for either the transaction participants nor the transactions itself. Rather, the entire community of blockchain users must collectively verify, authenticate, and process each block in the chain. Sure, the technology requires trust in the computing science behind it and trust that the system was designed to remove natural human tendencies for opportunism and found in traditional institutions. But unlike these institutions and the people who run them, algorithms and encryptions on a blockchain cannot be modified or manipulated in secret. This allows users to rely on underlying processes without having to trust anyone — which may be the best for everyone.