“The blockchain does one thing: it replaces third-party trust with mathematical proof that something happened.” – Adam Draper

1. INTRODUCTION As an aphorism says: Mathematics is Mather of all Sciences, so may be considered as the mother of the blockchain based type of trust. Blockchain is sometimes declared as “trustless”, which can be to some point a confusing statement, but actual context of this means that the trust has been taken out of the equation. As a fact, users need to trust in the mathematics and computation underlying blockchain system 1 (Raghavan, 2021). A mathematical proof is an argument that convince people that something is true 2 (Hutchings, n.d.). Therefore, following this way of thinking blockchain can be considered as a “Confidence Machine” 1 (Raghavan, 2021). As part of design, it is replacing the need for the third-party trust and intermediary itself. Offering mathematically based, fully transparent, considerably cheap, immutable and independent trust.

2. SO, HOW IN SHORT DO EXPLAIN, WHAT A BLOCKCHAIN IS? There are many definitions of blockchain, more simplistic or complex ones. What they have in common is, that it is constructed from a shared digital network, that can record and process details of transactions, all in a sequential chain of crystallographic blocks. Blocks then are linked together in a specific way, and each block contains data. It is a virtual form of Ledger, acting as a single source of truth as well. To validate transactions the consensus algorithm is used, to acknowledge its ledger content. Consensus type can differ, as can vary the type of a blockchain.

The ecosystem of blockchains is quickly evolving and Distributed Ledger Technology can be seen as pervasive. This is because such technology is utilized not in finance only. Many other non-financial based fields take early advantage of experimenting with and adopting blockchain.

This cutting-edge technology is not a substitute for traditional databases, it can be use in a parallel way. It may be used independently, or together in order to ease big data management. 3(Casino, Dasaklis and Patsakis, 2019)

1. SOCIAL CONTEXT By commonly introducing blockchain to the masses, a new version of digital society is getting slowly being created. The more they engage, the more they dive and accept it. Especially if a friendly way of introduction is constructed. Most people are curious, the rest following examples. The perspective of making quick many gains, combine with an impression of maintaining their “bank independence” fuels use cases pooping as mushrooms. In all cases, a traditional third-party trust is replaced by network nodes’ mechanical consensus. All transactions are digitally recorded and democratically validated in a secure and permanent way. People do not need a bank or third-party broker to buy, trade, borrow or lend their assets. If they do not need to pay off intermediaries, transaction cost becomes cheaper and theoretically they save some money. The process is quicker, usually simpler, and served in a very exciting way. Using Apps based on Blockchain is an incredibly exciting experience, with plenty of colorful wallets, exchanges, and “cold” gadgets as well. It’s a good business for each party involved. There is a risk, sometimes high level involved. But where is the money, risk always exists, so maintaining a risk it’s not a new problem. Having a trusted system is of paramount importance. Basing trust on distributed consensus and mathematical records working well for the people and partly “unbanking” the system. Giving less to a middleman, leaving more for someone. There is a great need for clear rules and light-handed legal system to follow, in case of potential disputes and for taxation purposes. It can easily turn to regulatory trap for an average user. They can feel like they have been lured by the common availability of crypto-based services and the Crypto Friendly Index. Soon after, they may be confronted with and need to face all consequences of unpredictable low. That can include irrationally aggressive taxation duties combined with a lack of crypto tax accounting agencies. Despite the genius in coding, algorithms, and mathematical correctness, the legacy reality can clash with blockchain. So, in social terms, many people may acquire financial benefits, but many can be harmed by “mathematical proof that something happens”. Similar rules apply to disputes after hacks and exploits. Nevertheless, it needs to be sorted, before mass adoption on a social scale. Nevertheless, the overall situation looks good and engaged users are mostly happy.

2. ECONOMIC CONTEXT

I agree with the concept of decentralized distributed trust architecture of modern digital ledger. Not trusting actors can collaborate in a verified and trusted way. It solves the problem for mutually mistrusting bodies when performing trades and doing business. As blockchain became a more complete technology, it should increase its impact on the economy. The blockchain matter because the digital ledger matters. All parts of the transaction as an agreement consensus and trust in the accuracy of a ledger, create a base of modern market capitalism. DLT provides and secure it all. Also, by computerizing transaction protocols and enabling smart contracts, the process of transacting is quicker and decreases information costs. It may lover the entry level for smaller companies to participate in the business. It also minimizes external participation as well and may lower associated risk. It is worth mentioning, that distributed ledger technology is as reliable as the economic body that operates it. Similar rules to laboratory diagnostic may apply, so,” rubbish in — rubbish out”. Therefore, imputing correct data is still of paramount importance. You still need to have some trust in people performance, to undoubtedly trust a blockchain.

I tend to agree, that the concept of institutional cryptoeconomics may out-compeate currently working system. Institutional cryptoeconomics focuses on the rules that govern ledgers, the social, political, and economic institutions that have developed to service those ledgers, and how the invention of the blockchain changes the patterns of ledgers throughout society 4(Berg, Davidson, and Potts, 2017). Especially, if currently, working system is not as reliable and capable as it was, and element of trust is not as strong as required. I can see benefits in reducing the significance of expensive, slow in actions of third-party authorities. Once again, putting trust on blockchain works cheaper, quicker, and in a more trust-distributed way. Also, all types of assets are ineffective when allowing double spending, this problem has been sorted by putting cryptocurrency on blockchain.

As negative example of replacing a middleman with mechanically created trust machine, the lack of skills in the future can be created, as an inevitable consequence of the disintermidiating process. Well-established and valuable occupation as notary clerks, bank professionals, and traditional traders can be in jeopardy or even lost. A few generations were working to develop it. It is easy to replace it with machines and algorithms, but very difficult to teach and re-establish from the scratch. Also, we should not be over-mesmerized in the sense of security offered by blockchain. It looks solid from the cryptography and distributed consensus character point of view. But there is no mathematical proof that blockchain cannot be hacked, and when it happens it will spread quickly to all networking nodes. The “repairing” cost can be high and painful. The “polymeric falcighol derivation” secret and high probability of quantum computation development 5(RationalWiki, n.d.), can also significantly challenge security status. Hopefully projects like IOTA working in advance on it.

1. POLITICAL CONTEXT If enabled to monitor government employees, politician payrolls, and taxes on blockchain, it can significantly contribute to better general national performance. It will shed light on, and help to monitor mutual obligations, duties and election promises as well. As the nature of blockchain is “borderless” in his design, it allows for unlimited, global transfers and payments. It will certainly reshape current political models of planning, finance, and human resources management. It may also reduce the need for repetitive actions, paper-intensive formalities, and red tape clerk numbers. If fully implemented and mass adopted, the political landscape will never be the same. New issues such as “debanking” and forming “neo-banks” taking place under Senate consideration. Also, in addition to CeFi and centralized cryptofinance, the strong activity of DeFi takes place in the crypto decentralized ecosystem. DeFi goal is to provide functions analogous to and beyond, those offered by traditional finance 6 (Bragg et al.,2021). DeFi aims to reinterpret and recreate the financial services model on the foundation of distributed ledger, digital assets, and smart contracts 6 (Bragg et al., 2021). All those activities will certainly impose significant impact on the current political and financial landscape. Also, I strongly tend to agree that open-source currencies construct new exemplar and three-tiered commons 7 (Antonopoulos, 2015). Where collaboration of open-source software and technology standards, combine with the activity of multiple users, may create a better economic reality for everyone involved. The elemental “festival-of the-commons” effect, even if capricious in early adoption, can generate huge, shared values in distributed ledger community 7 (Antonopoulos, 2015). Why not join, then!

“Whiter” government and big corporations’ structures, are another example of positive DLT impact. It will force transparency and regulatory functions by applying “regtech” 4 (Berg, Davidson and Potts, 2017). Putting the trust of voters and elections on digital ledger, is additional example of disruption made by blockchain. Potentially, with beneficial outcomes.

On the other hand, blockchain can compete against firms and governments. As far as can be beneficiary for both organizations, it can also reduce the need for some services. In an extreme case, reduce or replace them. Finally, replacing the “M — form” organizational structure with the new proposed “V-form” looks like quite interesting idea 8 (Berg, Davidson and Potts, 2020), but in each case mechanical trust should not be overestimated.

Over-automation can lead to an extreme level of unemployment and social disaster on a global scale!

1. SUMMARY As a brief review of the quoted idea, the main key points need to be presented: · The blockchain does more than one thing, indeed. · It certainly replaces the third-party trust with mathematical proof that the event has happen. · It is also creating multiple opportunities, and serious consequences as well. · All its actions have a strong disruptive impact on the social, economic, and political world. · Some of them are positive, some may be negative, and not everything is 100% predictable.

2. CONCLUSION Replacing intermediary trust with mathematical proof that something happened, it’s powerful statement and even more powerful technology. It will implicate disruptive consequences on individual’s lifestyle and industries performance. Possibly after some initial mistrust and indecision, following the vision of all promised benefits, the common acceptance and implementation may take place — or will be forced. We are all part of this socioeconomic and political experiment. Whatever, we like it or dislike it, understand it or not, the impact of blockchain-generated trust will contribute to the way we are leaving our life. The powerful and innovative technology itself may work parallel to existing one, integrating with legacy systems or totally replacing them. The future of this is very close, just approaching. By login into App and joining the blockchain, we are doing our contribution, therefore blessing the technology. The primary question is: are we going to wittiness evolution or rather revolution of trust? Until now looks like “All Roads Lead to Blockchain”.

3. REFERENCES

4. Raghavan, B., 2021. Blockchain and trust: why confidence is still lacking in one of the tech world’s biggest innovations. [online] Business IT. Available at: https://www.bit.com.au/guide/blockchain-and-trust-why-confidence-is-still-lacking-in-one-of-the-tech-worlds-biggest-innovations-568132 [Accessed 5 October 2021].

5. Hutchings, M., n.d. Introduction to mathematical arguments. [online] Math.berkeley.edu. Available at: https://math.berkeley.edu/~hutching/teach/proofs.pdf

*Originally published at https://spektrumlab.io on *December 28, 2022