October 27, 2017
Blockchain is a technology designed to create trust. More accurately, to automate transactions between parties where each party can be assured that conditions of the relationship can be trusted. This is achieved in two ways: first, the technology itself is secure and cannot be compromised (under certain limitations, like protecting your private key); second, the terms of the relationship are coded in smart contracts, which are transparent for all parties to check. These three components – technology, transparency and checking are key to establishing trustless trust, which enables completely new ways for commerce to function.
While technology is secure by definition (with known limitations), checking is left up to parties’ capabilities, transparency is required to be established on the design level. It is the responsibility of the developer to insure maximum transparency that will allow parties to establish trustless trust. Blockchain explorers allow transparency of transactions, but smart contracts can be non-transparent. Most importantly, actions of people are not transparent unless they make them so. Therefore, to establish trustless trust principle, a developer needs to automate all critical terms of the relationship in the smart contract and make them transparent.
Best example of this principle in action is www.icomonitor.io. Its purpose is to check all critical terms for ICO on transparency. It’s goal – to tell everyone about the intentions of the ICO developer. If the terms of the ICO were not automated, or if the automation is not transparent, the intentions are not to comply with the trustless trust principle. Our interpretation – that they are not to be trusted as they have not invested minimum amount of effort to comply with the basic blockchain principle. Passing ICO Monitor does not mean they should be trusted completely, but not passing it means that they shouldn’t. For this reason, in our work with clients on ICO we insist that code must be designed to pass the transparency test. Blockchain gives us the tools to build and improve trust (and decrease friction in society by doing that), so using it in our work is the least we can do. Thanks to www.Neufund.org for such a great tool!