Why Blockchain Will Not Solve All the Economy's Trust Problems

Blockchain does not guarantee the veracity of the data input into a blockchain, nor does it raise a red flag when pertinent data is intentionally left out.

To trust a blockchain, you have to trust those responsible for the data it time stamps. And they are merely human. JL

Jill Carlson reports in Slate:

Adherents believe they no longer have to trust the media to report accurately. They no longer have to trust their politicians to follow through on campaign promises. Vendors are providing fair prices. Banks cannot embezzle. Criminals cannot engage in fraud. They do not have to trust boyfriends to be faithful, nor children when they let them take the car. It’s all right there on the blockchain. (But) just because a company creates a digital record does not mean that record represents reality. Distortion of reality is a growing threat. We can record false claims on a blockchain. We can omit data. The blockchain is only as good as the data put in it.

The Truth Machine. The Trust Machine. The new technology of trust.

The descriptors used by blockchain’s proponents and promoters, including academics, scam artists, and security researchers, often border on religious. The blockchain, they often say, is the panacea for that universal human affliction: trust issues.

Blockchain devotees say the technology can solve our trust issues—that it is trustless, that it requires no trust. This is the phrase that launched a thousand corporate projects and  startup companies. These startups purport that their blockchain technology will enable us to ensure that our vegetables are organically sourced, our diamonds conflict-free, and our data securely our own. The authorities making these promises present the technology in opaque terms and emphasize its complexity. Ironically, this technology that promises transparency and verifiability is presented as completely inscrutable. In Emily Parker’s “The Truth Is All There Is,” we see a world in which these appealing promises have, in many ways, come true. At least, that is the understanding of the inhabitants of that world. They believe that the truth of everything is displayed for all to see. As such, they are rid of conflict, free of dispute. They no longer have to trust the media to report accurately and impartially. They no longer have to trust their politicians to follow through on campaign promises. There is no doubt that vendors are providing fair prices. Banks cannot embezzle. Criminals cannot engage in fraud. They do not have to trust their boyfriends to be faithful, nor their children when they let them take the car. It’s all right there on the blockchain.

But the one thing these people cannot verify is the validity of the blockchain itself.

The society Parker creates is theoretically alluring to all of us attempting to navigate an increasingly complex, murky reality. It is no coincidence that back in our world, blockchain technology has captured society’s imagination at the precise moment truth started to feel particularly hard to discern.

The hype around blockchain technology reached a fever pitch in the wake of 2016. The year of the U.S. election. The year of Brexit. The year of Beyoncé’s Lemonade. It was this year that “fake news” entered the modern lexicon. Donald Trump coined it. Or at least he claims he did. It was in this context of chaos and confusion that blockchain technology emerged into the public consciousness as a single source of truth that could render all of our interactions, transactions, and relationships as transparent and verifiable as a simple math problem.

But as I’ve written previously, the truth about the technology’s promises, like the technology itself, is complicated. To a certain extent, the complexity makes it sound all the more trustworthy.

Here is what is true. Blockchain technologies can act as time-stamping services. Leveraging a blockchain, it is possible to create a digital record at a given point in time and store it in a global database. These records are immutable. They are tamper-resistant because they are stored by computers all over the world and therefore have no single point of failure. They are transparent, meaning any changes made to the records will, themselves, be visible and recorded.

This all sounds promising. It all sounds in line with the notion of a trustless system. However, the promise breaks down in linking those immutable, tamper-resistant digital records back to the real world. Just because a company creates a digital record claiming the fair-trade provenance of a diamond does not mean that record represents the reality of where any given diamond came from. All it shows is that someone, at a certain point in time, made a digital record making a claim.

Similarly, just because a person claims to have uploaded all of her photographs to a blockchain—like Mila’s mother in Parker’s story—does not mean there are no other pictures from her life. Omitted data, bad data, too much data: These dynamics rob a blockchain of the claim of being a source of truth.

Garbage in, garbage out. This concept in computer science means that an input consisting of flawed data will generate a flawed output. So it is with blockchain technology. We can record false claims on a blockchain. We can omit data. Suddenly, that source of truth does not appear so honest.

Much has been made over the years of the menace that cryptocurrencies and their underlying technologies, blockchains, pose to society. Money laundering, dark web markets, criminal activities. I would propose, however, that perhaps the biggest danger posed by blockchains lies in their branding. As long as blockchain technology is seen as a truth machine, whatever is written into these blockchains is likely to be presented and blindly accepted as reality.

In Parker’s story, journalists like Mila create prediction markets: real-time betting markets about all manner of political events, sports outcomes, and celebrity drama. The prediction markets are eerily accurate and precise. It is almost as though they are self-fulfilling, like the wisdom of the crowds wills itself into existence.

This is an apt, if amplified, reflection of our algorithmically driven 21^st-century existence. The data of the crowd indicates to an algorithm that a song will be popular, and the algorithm puts it at the top of every playlist and makes it so. The data of the markets shows that a stock should outperform, and a thousand trading bots trade accordingly and drive the share price higher. News is presented as reality and it is accepted as such, and so becomes the world’s new version of the truth about things.

Distortion of reality is a growing threat. Deepfakes, synthetic videos that replace an image of one person with that of another, may soon become indistinguishable from authentic videos. Today, deepfakes may largely be used in the making of memes, face-swapping celebrities, but their proliferation will undoubtedly have major implications on everything from political campaigns to policies around pornography. What makes the threat of deepfakes so profound is that they render a medium formerly viewed as reliable—namely video—undependable. We cannot trust the very thing that we are supposed to trust. This constitutes the most substantial danger to a society’s notion of reality.

If we are supposed to trust whatever is on a blockchain, then we are in trouble indeed.

After all, the blockchain is only as good as the data we put on it.