Blockchains Don't Have to Be Perfect, They Just Have to Be Better

There's a moment during almost every presentation I give on blockchain technology's potential to address trust barriers in supply chains where an audience member asks, "But are we not still trusting the thing/person inputting the data?".

Some see that as contradictory, an invalidation of the argument that blockchains can solve the trust problems that create friction, inefficiency and opacity within the transaction chains that link farmer, miners, parts makers, goods manufacturers, shippers, wholesalers and retailers into our global trading system.

If we delve into it, it offers a useful framework for understanding the true power of distributed ledgers generally and of blockchains specifically.

First, no one should regard blockchains as promising some kind of "Trustless" utopia.

The same goes for blockchain ecosystems, even those of bitcoin and other permissionless payment systems whose value exchanges are entirely expressed in a self-contained on-chain native cryptocurrency rather than founded on potentially unreliable off-chain data such as the reports from a factory floor.

Why even bother with blockchain solutions? The answer: Because while they can't fix everything, they do have the potential to improve one important trust problem in society's economic architecture.

If we have a system that reliably records a sequence of changes of state within a particular dataset, doing so in a way that, for all intents and purposes, cannot be altered by any single party without the consensus agreement of everyone else, we can remove one layer of uncertainty from the multifaceted trust equation that lies at the heart of any economic community.

Ironically, given all this talk of "Trustlessness" or "Trust minimization," the result of any effective blockchain solution should be to strengthen our collective trust in each other, not diminish it.

There's a lot you can do with a data log that everyone trusts, including in situations where you can't necessarily trust those inputting the data.

No, a blockchain isn't perfect and a blockchain can contain garbage.