Blockchain is not a trust machine

posted in: Blockchain | 0

This post is also available in: Deutsch (German)

In October 2016 a book about Blockchain by my colleague Daniel Burgwinkel was published with a technical contribution by me on the topic “Trust and Liability”. Here is the Management Summary:

Abstract: After the euphoria about the Blockchain technology follows the question of trust in this “new” technology on its feet. Technical security usually plays the smallest role. Rather, the question arises: What must be done to ensure that potential users use the system not only playfully, but also in tough business life? A central question here is liability and the allocation of responsibilities.

MANAGEMENT SUMMARY

Trust develops in the context of application, in the cultural context and is not least also a question of generations. The core elements of trust, namely security, liability and accountability, are not technology-related.

In this respect, the definition of trust is unlikely to change. Even the best (meant) technology has no influence on this. We have experienced this with digital signatures and encryption methods, which are still only marginally used today.

Systems, such as blockchains, can be implemented in different ways and ultimately the implementation decides the question: How trustworthy is this system? Because one thing is certain: errors will occur and then the question of who is responsible will arise.

The blockchain is therefore not a “trust machine”, as was optimistically formulated in the Economist [1]. While it can help to create high-quality systems and increase security, it does not guarantee commercial acceptance. Therefore, most blockchain systems will be implemented as closed systems, without anonymity and with the known security mechanisms. This, however, will only be done if the deployment pays off. From experience one cannot be very optimistic. The use of new security procedures is delayed until there is no alternative.

As before, both the security measures as well as the organizational and legal framework conditions must be carefully thought through and implemented. Anyone who thinks they can easily set up a blockchain system without clarifying these aspects should keep their hands off it.

The question of whether anonymous systems can assert themselves is really exciting. As desirable as this would be, I am rather sceptical. The pressure of the nation states on the control of the network will have a major influence on how blockchain systems can be operated.

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