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Shifting to participation-based ecosystems

A lawyer told me a few days ago: “trust, it’s about the future” but no, I said, it’s about the past. At least it is a combination of the two. If you position trust only in the future, then I call it hope.

The key difference between hope and trust is their base; trust is based on reliability, confidence or belief in someone else. Hope is merely a desire and expectation for a particular thing to happen. So in other words trust is hope + elements that validate my belief.

The more elements your mind (or your system) succeed in collecting, the more confidence is added to hope, and your level of trust that something is going to happen grows. However you put it, trust has a component of risk.

Trusting requires that we:

(1) can be vulnerable to others.

(2) can rely on others to be competent to do what we trust them to do.

(3) rely on them to be willing to do it.

(4) rely upon what we expect to be done, and in a way and with the tools that will not compromise the outcome.

What makes us more or less prone to take the risk, is determined to what extent we need to trust and what we have to lose from trusting something.

As a stakeholder in your company, to what extent are you allowed to trust?

The extent of the monetary cost that the risk represents varies, depending on the industry you are in. The more your company has to lose from trust, the more will ask you to know instead of to trust.

An example of how trust can work is the famous Game Theory experiment, the ‘The Prisoner’s Dilemma’. Here, two parties interact with one another, if they both cooperate with each other, they both benefit to a small degree, if one contributes and the other does not, the latter benefits to a large degree, but if they both fail to contribute, they get nothing.

Here, there are different natural reactions:

  1. some will automatically always want to cooperate and work together

  2. some will always act selfishly

  3. some will play cautiously until they have reason to behave one way or another

This means that when we all simply trust each other automatically, everyone would benefit.

Sadly, however, research and statistics state that:

Research says that the average person lies around 165 times per day; 30k websites are hacked every day in the US, and; ⅓ of US consumers are affected by data breaches. is one of the plethoras of websites online that sell fake UK or EU passports online.

So it is not surprising that trust is considered a risky attitude.

In order to de-risk trust, we must move from hoping, to closer to knowing.

To de-risk:

  1. the source

  2. the tool used by the source

  3. the underlying system that host sources and tools

  • About sources: We all make claims on our CV’s, which are all supported by sources, these currently have to individually be checked and verified. Ending up a long process for users. This causes issues, as lots of users fail to check all the credentials they are provided with, as it is such a time-consuming process. For example, there is the case of Johnson Kane, whose falsely inflated credentials landed him a job as the Chief Executive of an Educational trust. He claimed to have run both a government agency and an investment bank as well as being high up in John Lewis, where he was actually a shop floor salesman. This was an important failure as, under his leadership, five schools fell to special measures and were thousands of pounds in debt. All because nobody verified his credentials.

  • About reliability of the information: Sadly most of the available information can be falsified. Databases (DB) are by definition open spaces for collaboration; passwords and credentials on companies are the preferred targets of hackers. Even UK passports can be falsified. In fact on average, a thousand fake passports are seized at UK ports and airports every year. Another example: Degree certificates make up a wide market of forgeries across the world, and even in the UK, there were 3,000 sold from just the main fake certificate market (Axact) across 2 years. Currently, it is the employer's responsibility to check each and every certificate, however, Higher Education Degree Data check (HEDD) chief executive Jayne Rowley said only 20% of UK employers ran proper checks on applicants' qualifications.

How did trust work in the past?

In the 16th century, Lloyds exercised trust In a café:

Lloyds Insurance Market originally began in London coffee shops, where traders would discuss the relief risks of seaborne trading in any week and insure against this risk.[5] Merchants, and others who offered insurance against ships sinking, among other maritime risks, would aim to attract all the best sailors and shipping experts to socialize in their coffee shop, thus lending their expertise to the insurers.

The provision of this expertise lent legitimacy and credibility to the creditors, and as they formed during a time of war where shipping insurance was in great demand, they quickly built up a name as the group with the greatest expertise around. As for customer trust: in order to purchase this insurance and thus enter this community where expertise and advice were traded just as readily as insurance, a merchant would have to already have contacts within this community who could introduce him to an underwriter.[6] While in this case, it has developed well outside a community trust system and into one of the largest insurance institutions in the world, it is important to note that this began with a strongly interconnected community of merchants, sailors and underwriters, developing the trust required to function. The dealings that took place led to the establishment of the insurance market Lloyd's of London, Lloyd's Register, and several related shipping and insurance businesses.

Today we can’t find trust at the coffee shop, if we could, it would be hard to funnel proofs in a way that they can be trusted and cannot be manipulated.

It’s curious to notice that we invent very little from zero. We borrow, we transfer, we re-create, but rarely do we invent.

A blockchain is a shared ledger, the truth is simultaneously made available in each ledger, if you want to change the information all nodes realize that and eventually say “no that’s not true”, if and when necessary. All network participants have the same interest, respecting the rules for continuing trading, the system itself makes it very hard if not impossible to cheat, any transaction of information is transparently visible to all and this transparency disincentivizes cheating.

It is the natural evolution of 16th-century business communities. As at Lloyds café, reliability gives reputation and reputation builds trust. Transparency is the element that disincentivizes cheating.

Simply, the context has changed. Markets are global, William Petty in 1682 estimated the world population at 320 million (modern estimates ranging close to twice this number) today we are over 7 billion, so 10 to 20 times more. Trust across business personnel, in a town like London that counted 120,000 people, is possible as each business sector would only number in the tens or hundreds, and could realistically pass through a café. However in modern London, with a population of 9 million people, which is in reality part of an interconnected world of around 7.75 billion, the café becomes impossible.

In the overcrowded virtual world, which runs at high speed, it makes more sense to replace intermediation with digitally enabled transparency, convert every piece of information into an immutable verifiable piece of truth and finally replace reputation mechanisms with immutable records.

Today, as in the past. We need trust. Human behaviours and expectations didn’t change so much, the scenario did, and so the underlying infrastructure needs to change to facilitate trusted interactions and fruitful partnerships where everyone contributes to keeping the space safe, transparent, and relevant.

Prioritizing digitally-enabled transparency will significantly boost contribution. Shifting from control-based ecosystems to participation-based ecosystems will help successfully implement the underlying infrastructure that includes instead of excludes, and provide better chances to widen the opportunities for every participant.

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