The One Word Underpinning Web3’s Potential Success (Or Failure)

Trust. If you distill the benefit of Web3 down to a single word, this is its essence.

Why trust, and not decentralisation, or ownership, or tokens, or blockchain, or some other Web3 primitive? These are features of Web3 that facilitate trust.

Be that trust in exchanging a cryptocurrency or NFT with someone else without going via an intermediary. Or trust that someone is who they say they are, or that an organisation did carry out some action that it claimed to. The essence and overarching benefit we have by embracing Web3 technology are new models for trust, that are provided by the software layer, underpinned by cryptographic techniques.

With Web1 and Web2, we have had to rely on intermediaries to facilitate trust between people and organisations. These intermediaries provide a number of different services, for instance:

* The issuance of TLS certificates to provide secure communication between websites for capturing information from users. These are also used to provide a level of assurance that the site is authentic (think the padlock in your browser when you go to yourfavouritesite.com)

* Facilitating payments such as the services provided by banks or fintech’s like Stripe

* Data exchange to facilitate trust between organisations

* Social media platforms such as Twitter, LinkedIn and Facebook

The last couple of services are interesting to delve further into, especially with respect to Web3.

Unnecessary exchange of data between organisations is rife due to a lack of trust between them. This comes down to the challenge of how one organisation can ensure their view of the world is consistent with the one they are trading with. I.e. if you enter into a contractual agreement with another company, how can you ensure that both parties agree on the same terms? Then subsequently when an action is taken such as payment for services, how can you ensure both parties have a consistent world view that this action such as a payment, has been made and settled?

In the Web2 world, best case this trust model is performed by an intermediary, but more often than not, someone’s word is being taken at face value.

Usually, this is because there is one party on the transaction who has greater influence than the other. This is due to their scale or reputation. Think if you purchase something from Amazon, or a startup entering into an agreement with a large corporate — there is an incumbent who is ultimately dictating the terms of the transaction.

You trust that this person or organisation will deliver on their service, but you are completely at their mercy in terms of this information they choose to disclose to you about the transaction.

Underpinning this trust is typically repetitional or social proof. The proof may come from a number of different sources such as:

* Having previously entered into an agreement or transacted with them

* Recommendations from other companies or people you know

* Reviews from sites such as TrustPilot or Google

* Social media presence

* General market presence

Whilst none of these sources of reputation are guarantees on their ability to deliver on any agreed service, they do help provide a level of confidence that they will.

However, it is here that we meet the limits of trust with Web2. Most of the trust in Web2 is underpinned by social proof where popular platforms can exert undue influence. There is no irrefutable layer of proof operating that prevents these platforms from being able to demonstrate they are operating in the way they claim they are. This is simply because these platforms exist as silos, with each organisation building their own worldview.

Whilst the internet and web technologies do provide the connectivity between organisations that have allowed them to easily share information with one another in a secure manner, this lack of trust in data has resulted in the propagation of these silos.

Blockchains and distributed ledgers provide the trust fabric that enables organisations to utilise an external source of trust that over time will become commonplace allowing individuals and companies to take trust for granted when they enter into agreements with others.

We can see elements of this right now with users of cryptocurrencies. Cryptocurrency exchanges allow you to send assets from one wallet address to another. When these transactions take place, you can see details of the transaction on the associated network such as if you send the cryptocurrency Ether, a link to the transaction on Etherscan will be provided that provides proof of the transaction taking place.

Over time as Web3 plumbing becomes more commonplace behind an ever greater number of products and services, it will be possible to see proof of events taking place via these public ledgers. This will need to be underpinned in some cases with privacy technologies to ensure that only specific parties can interpret and validate the data, but this I believe is the new trust foundation that will become commonplace over the next decade.

Whilst some may question the significance of this and ultimately what the real value is when we have equivalents currently backed by social or reputational proof as we have discussed earlier, what’s so powerful is that shared ledgers will become the common frame of reference.

Think about right now when you’re trying to track a delivery that is long overdue. You may call up DHL or use their website to track what’s happened to your package, however, the information is sparse and restricted to their worldview.

With proof of transports of goods existing on-ledger, more information about the transition of the goods from one provider to another involved in the delivery can be added seamlessly with far lower friction than is currently the case, as the barriers to using Web3 are not controlled via centralised gateways as is the case with Web2. This will provide definitive views on where your goods are in transit and provide a common frame of reference for all involved in the delivery of that service.

This type of proof or trust as a service will be helpful in the establishing of new products and services that rely on proof of the quality of their services underpinned by activity on ledger rather than social proof driven by online reviews, or follower counts which in today’s day and age are systems that are typically driven by incentive structures, rather than the underlying quality of the service being delivered.

Take online reviews, for instance, companies can incentivise others to leave reviews for products or services with future discounts or payments. In some instances, reviewers even get the product or service for free or at a heavily reduced rate.

Or in the case of social media platforms, people will follow or engage with others online with the hope that the person or company will follow or engage with them back increasing their own profile in the process.

These two examples illustrate where we are today where having a prominent social media presence or lots of five-star reviews is no guarantee of quality service, but they are some of the key pillars of online trust in Web2 products and services.

This clearly isn’t ideal, which is where a generally available, platform for trust underpinning transactions is a very powerful concept, which is what shared ledgers such as blockchains give us.

We will not be able to fully eliminate centralised services or intermediaries, intermediaries will always be required to add value to services, be that by bundling them or simplifying access to them. Social proof and online reputations will also remain as one mechanism to provide a degree of trust with online services.

However, when we can get to the point of having trust via shared ledgers as a first-class citizen underpinning these online services, it will enable us to streamline and in some cases eliminate unnecessary services provided today for a more transparent and fairer future for all.