By Steven Pu, Founder and CEO of Taraxa
With crypto prices surging to all-time highs and mainstream corporations adding crypto to their balance sheets, cryptocurrencies are celebrated as the biggest innovation in decades. But what about blockchain, the technology behind it? The world seems to have forgotten that blockchain could be used for anything other than financial assets - forgetting that the most powerful functionality of blockchain is to close transactional trust gaps, with applications far beyond just currency.
The world is wasting more than 80% of its transactional data
Over 80% of the world’s transactional data is unstructured, uncaptured, and unverifiable - in other words, completely wasted. The problem is that in today’s endless pursuit for rapid, data-driven decision-making, we really can’t afford to throw away this much useful data.
All this transactional data goes wasted because they are untrusted. Informal transactional data from machines are untrusted because they can be easily tampered with, with no guarantees on the data’s source or integrity. Informal agreements between people are not credible because they’re floating around in disconnected communication mediums, such as texts, chats, or emails, embedded inside informal conversations, oftentimes leading to confusion and disputes around “who said what when.”
Would you buy a used car from a random person you just met? You can’t just blindly trust the vehicle’s history provided by the seller. That’s why you buy cars from a dealer and pay for costly vehicle history reports and commissions – so that you have some trust in the vehicle’s history, such as mileage and accidents.
Do you find yourself in tiring and confusing disputes with home repairs contractors about the scope of work? Did you meticulously document the hundreds of little changes throughout the project with signatures from all stakeholders? Of course, you didn’t; no one does that. When there are hundreds of little changes in your latest home remodeling project flying around, it's hard to trust each other’s memory of exactly who said what when regarding whether the back window sill should have been painted beige or grey.
Now imagine these problems happening on a much larger scale. You don’t have to imagine that hard because they are indeed happening every minute of every day, everywhere around the world. It’s silly to think that this is a whitespace market, but that’s exactly what it is, whitespace. Up until now, our only tool to resolve this problem is to force every person and machine to obey the same standards and use the exact same system to reach trust and agreement.
That hasn’t worked out, at all.
How blockchain makes informal transactions trustworthy
How can technology make a piece of information trustworthy? It can’t, at least not directly. What blockchain can do is guarantee the provenance and immutability of the information. When combined, this creates accountability for the entity – whether it is a machine, a person, or an organization – committing the information in the first place. In turn, blockchain makes it harder and less profitable to submit false information, thus making the information trustworthy. Provenance is guaranteed through securing data at its source, and immutability is guaranteed via a tamper-proof audit log.
Securing data at the source means you get to these informal transactions, not through some sort of intermediary, but right where and when they happen. For a machine, that means integrating a piece of tamper-proof, secure hardware to commit signed hashes of the raw data that it is collecting.
For a person, that means capturing signed hashes of everyday agreements made between stakeholders right where they are making them - in chats, SMS threads, emails, or whatever else - and then committing those signed hashes to a blockchain. This is critical for both guaranteeing that the signatures are correct, and making it enticingly convenient for the end-users. It doesn’t require them to change their behaviors or ask them to download an app, or even register for a service.
Once the informal transactions are secured, they are committed into a tamper-proof audit log on the blockchain containing their hashes and signatures. Using hashes rather than the data itself means that the process doesn’t violate user privacy. This becomes a perfect record of “who said what when,” and once stakeholders can agree on that, we’ve eliminated the primary source of confusion and disputes driven by informal transactions.
Here are a few interesting examples.
Remote and hybrid work
COVID-sparked a new wave of self-employment, casual and gig-workers, and small-scale entrepreneurs and businesses, overall making it much harder to coordinate work. Independent contractors and gig workers need to be sure they’re getting paid on time, especially when doing ‘pay upon receipt.’ Yet, the abundance of collaboration suites makes it even harder to bring everyone on the same page.
By capturing stakeholder agreements right where they occur and anchoring them to a public blockchain ledger, a blockchain-based platform will give remote teams the unbeatable speed of coordination and assurance they can hold clients accountable no matter how they documented their work, or which apps they use.
P2P car trading and mobility
The second-hand car market is rife with fact-checking concerns. You can never be sure of a vehicle’s history without paying a dealer or a reporting company for the information, even then there are no guarantees. With a secure IoT endpoint integrated into a blockchain-enabled audit logging, the vehicle itself is able to make highly trustworthy commitments about its mileage, location, and collision history, enabling car owners to finally get rid of the unreliable and expensive middleman.
A trusted audit trail of a vehicle’s history is also an important step towards enabling decentralized, peer-to-peer mobility as a service. It would allow an entire ecosystem of maintenance and value-added service providers to plug into the platform and removing the expense and risk for a centralized platform.
Automotive supply chain quality assurance
Supply chains are filled with points of weakness where counterfeit or substandard quality inputs can compromise the integrity of the end product. For instance, quality assurance and certification in the automotive parts sector require heightened vigilance and transparency to ensure that safety and quality standards aren’t compromised.
Due to the complex business environments and high incentives for counterfeiters, automotive parts quality assurance & certifications are coming under increasing pressure to maintain their integrity. Innumerable informal transactions occur during factory inspections, assembly line certifications, and shipment spot checks between manufacturers, logistics service providers, and OEM representatives. By capturing these transactional interactions at the source via chats or texts and anchoring them into an audit trail on the blockchain, the entire quality assurance process could be made far more transparent and trustworthy.
The vision: helping humans scale.
Driven by accelerating innovation, globalization, and now by COVID & distributed work, the world inevitably moves faster and becomes more complex. To keep up, we need better ways to coordinate with much higher efficiency, beyond just a futile struggle to get everyone and everything onto a single tool or standard.
We already have the solution in blockchain technology, and it will help to scale our society into the next millennium. There are multiple use case scenarios that necessitate a reliable audit log documenting explicit agreements about facts and events - in human-to-human, human-to-machine, and machine-to-machine interactions.
About the author:
A Stanford graduate and former associate partner at Monitor Deloitte, Steven is a serial entrepreneur in healthcare, IoT, and blockchain. Fascinated by the promise of decentralized networks for making transactions between people, companies, and machines, fully trusted and accountable, he quit his day job to solve the failures of centralized organizations.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
