Blockchain’s Trust Paradox
Blockchain’s Trust Paradox
Noelle Acheson is a 10-year veteran of company analysis, corporate finance and fund management, and a member of CoinDesk’s product team.
The following article originally appeared in CoinDesk Weekly, a custom newsletter delivered every Sunday to our subscribers.
A Nordic country known for its friendliness and stoicism may be about to show us the importance of trust.
This week, Sweden’s land registry, together with a group of private companies, announced a pilot to put land titles on a blockchain was moving into a new phase. After months of testing, the initiative will now focus on integrating the tech into bank processes.
While this may seem like an obvious non-financial application for blockchain (given the paper-intensive, slow and complex process of most property transactions), its rollout won’t be easy, especially in geographical areas where it is most needed.
Why? It comes down to trust.
For a government to migrate something as fundamental as property rights to a new platform based on an unfamiliar technology, it will need to count on the support of the people and institutions it is designed to benefit.
Without a high level of confidence in the government’s motives and competence, the project will encounter resistance, especially given the value involved, the risk if it goes wrong and the comfortable familiarity with the existing (albeit clunky) system.
Coincidentally, this week also saw the publication of the OECD’s trust barometer, which tracks the evolution of the degree to which citizens trust their government.
As expected, trust is declining in most countries.
Sweden, however, held steady at a relatively high level (56%), news that bodes well for public acceptance of the new platform, and should help the country set a good example for others to follow.
The Republic of Georgia is in a similar situation.
Earlier this year, it revealed that it was increasing the scope of a trial aimed at registering land titles and recording transactions on a blockchain platform.
The country does not make it onto the OECD barometer, but the World Bank indicates it is a relatively trusted place to do business.
Yet even in countries with ‘reliable’ governments, implementation will not be easy, especially when it requires the buy-in of a wide spectrum of private institutions.
One of the banks participating in the next phase of Sweden’s land registry trial has already said that they have no plans to implement the platform – it is participating just to learn more about the tech. However, with time, testing and communication, organizations in Sweden and Georgia should be able to gradually roll out blockchain land registries.
The positive impact on the economy could inspire other implementations, at home and elsewhere.
Yet most other countries have higher barriers, according to the OECD trust barometer. A lack of confidence in official institutions will weaken the acceptance of any change they propose.
Unfortunately, it is precisely those countries that could most benefit from a more transparent and tamper-proof land registry system.
The irony does not stop there. An even greater and often overlooked paradox is this: you need to start with a high level of trust before you can implement a system that makes it unnecessary.
Article Source: http://www.coindesk.com
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