The advent of the blockchain over the last ten years has caused both excitement and disruption in global markets, with Bitcoin and other cryptocurrencies threatening traditional financial infrastructure.
Though banks and governments alike have responded to the prospect of virtual currencies with a mixture of circumspection and tentative adoption, one aspect of this new phenomenon has captured the imagination of the public and private sector: the potential of the blockchain to establish trust in contracts, exchanges and services.
Trust in the blockchain
A blockchain, also known as a distributed ledger, is a non-centralized database which is both accessed and hosted by its users. Since it has no central server, it is challenging to attack or to compromise in any way that isn’t agreed by the majority of the users on the network.
A blockchain uses a consensus protocol to verify all changes made to the data that it hosts, whether that’s a record of a digital currency token or a user’s agreement to a smart contract.
The result is a fully auditable record of transactions that’s automatically verified over the network by multitudes of users, providing a robust methodology for establishing trust.
Trust-based applications for the blockchain
Smart contracts are ‘dynamic’ legal agreements on software platforms which can not only be influenced and amended by authorized outside sources (known as oracles), but which can enforce their provisions based on the information they receive from oracles. The more deeply the contract is connected to other digital services, the higher its reach.
Thus a change in circumstances that a smart contract is informed about can result in a range of actions, from sending an email notification, to the cessation of another digital service, such as a person’s ability to enter a building or to withdraw money from their account.
When the Bitcoin blockchain and sidechain eco-structure became increasingly over-burdened with non-monetary data flows, a number of smart contract platforms based around the blockchain principle began to gain traction and media interest.
The open source Ethereum project rose to become the market leader against contenders such as Cardano, ChainLink, EOS, Stratis, and China’s NEO.
Consequently, the blockchain model has begun to disrupt traditional legal and commercial sectors.
Transforming the online marketplace with the blockchain
With trust being essential in a selling environment, blockchain authentication has proved a compelling technology for the development of new online marketplace protocols such as Ink, OpenBazaar, Monetha and ModulTrade.
Though still subject to their community standards, blockchain-based marketplaces offer increased protection for sellers. These marketplaces protect from arbitrary rule changes and centralized market hubs such as eBay and Etsy, whose policy changes are governed by conventional economic models that can radically affect sellers.
The Global Alliance of Merchants on the Blockchain (GAMB) is also seeking to leverage blockchain to return power to merchants by creating an ‘ecosystem of vendors and merchants which is self-governing.’
Conveyancing on the blockchain
Conveyancing is the action of preparing documents for the transfer of property. It’s among the most formal and predictable of legal processes, and is now in a vanguard position for blockchain-based implementations. This year Sweden’s land registry began trialling blockchain registrations, while the UK land registry is proposing updates to its land register using blockchain.
Outside Europe, the Dubai Land Department claims to be the first government entity worldwide to provide an end-to-end blockchain-based conveyancing system. The Dubai Blockchain Strategy also integrates land registration details with related domestic suppliers such as power, gas and telecoms.
Last year the former Soviet republic of Georgia partnered with the increasingly influential San Francisco-based Bitfury Group to extend its considerable commitment to blockchain conveyancing, effectively converting its land registry to ledger-based transactions.
Blockchain technologies are already being mooted as possible remedies to property-based corruption in the bureaucracies of the former Soviet States and in Eastern Europe, as well as poorer regions in Southern Europe.
The blockchain notary
Notary services have also proved of interest to blockchain developers, mainly since the timestamping element of the work is associated with the first recognizable proposal for blockchain-based document governance by researchers at Columbia University in the early 1990s.
Though blockchain notaries are mainly focused on certifying and authenticating documents, the validity of such testimony in court remains in question, on a per-case and per-country basis.
Nonetheless, many blockchain notary platforms are leveraging the title, including Block Notary, Blocksign, ProveBit, Stampd, and Proof of Existence.
The future of trust in the blockchain
The growing use of blockchain as a trust system across industries seems set to have a revolutionary and democratizing effect on the way that companies will conduct business in the years ahead. The extent to which the blockchain eco-structure of trust crosses over into traditional civic and commercial industries may depend on the speed at which governments and traditional businesses adopt and adapt to distributed ledger technologies.
In time the trust-oriented features of the blockchain seem likely to establish their impetus as a financial force, leading to increased market adoption and a widespread user-base — the very aggregate force which weakens the server-based model, and strengthens the blockchain model.
