Why is blockchain so revolutionary and potentially a powerful force for good? Unlike traditional banking, blockchain technology is a trustless system. For example, banks need to ask us to trust them. When we deposit in banks, we trust that the bank will keep our money safe and not use it for unknown transactions. In contrast, trust in blockchain is part of the technology itself.
“Another important pillar that makes blockchain such a trustworthy technology is its transparency. Not only does the technology not ask for our trust, it allows for full disclosure, allowing everyone to know what is happening on the blockchain. There is no hiding on the blockchain, no corruption, and no sneaky tactics. And there is no way that things can slide by and go undetected,” said Ciara Sun, Head of Global Business and Markets of Huobi Group.
Singapore-based Huobi Group is one of the world’s biggest cryptocurrency exchanges and a publicly listed Hong Kong company. Sun was one of the speakers at the Crypto Asia Summit, a free virtual summit that allows attendees to interact with more than 50 of the leading experts in the cryptocurrency and blockchain industry. Tokyo-based blockchain solutions company TEAMZ, Inc. launched this summit after COVID-19 forced them to cancel their annual TEAMZ Blockchain Summit. The world’s first blockchain and cryptocurrency online live event platform and social network, ChainTalk TV, is hosting the summit as its first event.
Blockchain is a distributed, decentralized, public ledger. This is why blockchain is a trustless and transparent system, because there is no central authority that needs our trust, and everyone can check the recorded transactions.
Politicians and banks
Sun pointed out the irony of trust-based systems. The institutions that demand our trust, such as the political and banking systems, have let us down time and again.
“But even when our trust is broken, we still end up going back. We line up at the polls to vote for the next politician, hoping we can trust them. We go to the banks to deposit our money even though they have also failed before. But why? Why do we continue to trust these different institutions even though they have let us down and we see them break our trust all the time? A lot of it has to do with that there aren’t so many other choices, are there?”
Unless we want to put our money under a pillow, we have to trust the banks, Sun said.
“The entire system is built on trust. We hand over money in deposits and trust that when we come to get it we are able to. We trust the banks have not done anything too risky with it. Some of the risks we trust won’t happen include hedge fund trading while also financing subprime mortgages. But this also happened in 2008 with the financial crisis. But this also caused Satoshi Nakamoto to put forward Bitcoin and the technology called blockchain so that a trustless system could be formed instead,” she said.
Blockchain is a game changer
With globalization and open protocol, blockchain-based financial services can cover a larger range of end users with higher efficiencies. Blockchain can bring an ultimate change to the financial and digital financial industry.
“We are looking to make a game changer with blockchain,” Sun said.
Technology alone, however, is not enough. Sun said changing the game requires people to participate. Stakeholders must work together to build this new ecosystem and protect cryptocurrencies and users from unsavory parties.
“One of the biggest problems that we have seen as Huobi are the issues of security and risk control. Cryptocurrencies are new assets, but they are financial ones and as such they are attractive to people who want to steal them and scam them. For this reason it is important for us to try and stop them at any cost. But more than that it is important to keep security and risk issues down in the space because of the damage it can cause to a technology trying to gain adoption,” she said.
After all, a revolution is never easy or straightforward. It takes hard work, but that’s the price we have to be willing to pay to change the world.