Sheldon Anthony IO

In the decentralized world, where peer-to-peer transactions occur without intermediaries, trust becomes a critical factor for successful value exchanges. These networks provide autonomy, privacy, and security to users. Building trust in the decentralized world is critical for value providers looking to succeed in this new and exciting world. By prioritizing transparency, privacy and security, authenticity, and accountability value providers can establish themselves as trusted partners with their customers in a decentralized world.

In traditional value exchanges, customers trust intermediaries to verify transactions and prevent fraud.  As a result of the pseudonymous nature of decentralized networks, managing customer trust can be challenging. As customers cannot verify the identity of the parties involved in the transaction, this leads to a higher incidence of scams and fraud. According to Deloitte, three large global companies, each with at least US$10 billion in market capitalization, were embroiled in scandals and lost from 20% to 56% of their value after losing the confidence of their stakeholders, a total of US$70 billion.^[1] This risk of fraud and scams can significantly impact customer trust, creating a barrier to entry and increased costs for blockchain value exchanges.

A blockchain test conducted by Wal-Mart and its partners allows food products, including pork from China and mangoes from Mexico, to be tracked from their source to their destination. Wal-Mart is able to easily address any cases of contamination if they occur due to the documentation of the producer for each food product. A second benefit of the test was that it set up mechanisms for identifying and rectifying improper dealing with of food throughout its journey from farm to store. A blockchain-based system collects temperature data from sensors on food products, such as meat shipments, which cannot exceed a certain temperature. As soon as suboptimal transport conditions were detected, automated quality assurance processes notified relevant parties. The company has also announced the creation of a Blockchain Food Safety Alliance, a partnership that will address food safety in China by improving tracking, traceability, and quality. Using smarter, safer digital identifications for each physical product will be a key requirement for track-and-trace applications going forward. This will move from passive barcodes or serial numbers to, for example, enabling interactivity through the use of IoT sensors, enabling the use of more interactive methods. An embedded or securely tied smart device can automatically record and transmit data about the physical item's condition, including temperature variation, to ensure product integrity, as well as detect product tampering.^[2]

Trust is the backbone of any successful value exchange and this is especially true in decentralized blockchain value exchanges. As there are no intermediaries involved, customers must trust value providers and other counterparties to fulfill their end of the bargain. Trust is necessary to ensure that the transaction is completed smoothly, and the value change is not interrupted. Business owners must prioritize when conducting decentralized blockchain value exchanges. It fosters strong relationships, enhances transparency, promotes innovation and growth, and mitigates risks. All of which are essential for the success of businesses operating in the decentralized blockchain ecosystem. Trust is the key that unlocks the potential of this revolutionary technology, and as such, it should be considered a fundamental component of any blockchain-based enterprise.

Market leaders are using solutions such as reputation systems, smart contracts, and escrow services to mitigate these risks. Reputation systems allow for the tracking of transactions and the verification of identities, which can help to build trust between parties and demonstrate a value provider's commitment to transparency and accountability. Smart contracts offer automated and transparent transactions, creating efficient and secure value exchanges. Escrow services hold funds until all parties involved in the transaction fulfill their obligation. As blockchain technology evolves, a focus on maintaining trust will remain critical for value providers that want to succeed in this space.