Blockchains are often described as ‘trustless networks,’ but few really think about what that means or its implications to governments, enterprises, and the world at large.
Trustless networks can loosely be defined as networks that require no overarching authorities or intermediaries to govern them. They have mechanisms whereby participants reach a consensus on the truth without needing to know or trust each other.
Bitcoin SV (BSV) is one example of a trustless blockchain. Nodes reach consensus on the state of the ledger, and due to the economic incentives of the system, it would be more profitable to process transactions honestly than to take any harmful or nefarious action should any one party gain the power to do so.
Let’s look at how trustless blockchains can reduce risk and improve trust and transparency in a variety of ways.
Storing data securely on trustless blockchains
We live in a data-driven world, and the secure storage of sensitive data of all kinds is at the top of any organization’s agenda. Whether they be related to internal data on business strategy or the personal data of citizens held by a government, data breaches, leaks, and compromises of any kind can be costly both financially and reputationally.
Trustless blockchains like BSV were designed to mitigate the risk of sending, receiving, and storing data. Bitcoin is, in its essence, a distributed database, with the state of the ledger maintained by the nodes that write to and maintain it for profit.
Writing data to the blockchain in this way gives organizations of all kinds peace of mind that their data has integrity. Any subsequent access to the data or alteration of it after the initial upload is recorded on the public blockchain, making it possible for the first time to prove that data has or hasn’t been tampered with and take corrective action if necessary.
The ability to trust data is going to become even more important in the age of artificial intelligence (AI) and machine learning. Ironically, it is trustless networks that will make data more trustworthy.
Transmitting data with blockchain applications
Yet, storing data securely is not the only thing we can do with massively scalable public blockchains. Sending and receiving it also becomes safer.
Applications such as email have already been built on the BSV blockchain, making it possible to send data directly from sender to recipient without going through trusted middleman servers.
In an age where data-harvesting corporations control the networks we use to communicate and where nobody can be totally sure who is listening to private communications, be they adversarial governments or corporate competitors, the ability to transmit sensitive data via peer-to-peer networks will have revolutionary implications.
Once again, we see with some sense of irony that it is because of trustless networks that we can trust our communications are 100% secure.
Enhanced cybersecurity utilizing blockchain technology
The secure storage and transmission of data have one notorious enemy: hackers. Whether they are in it to steal data, cause havoc, or obtain profit, hackers are a menace to society and cost governments and corporations billions per year. It’s estimated that cybercrime will cost the world $10.5 trillion annually by 2025, which is likely to grow significantly as time goes on.
Yet, thanks to trustless blockchains, next-generation cybersecurity tools like Sentinel Node are being developed to dramatically reduce the time it takes to detect hacks, allowing solutions to be deployed faster. Tools like this write transactions to the immutable blockchain detailing the state of a network every second, allowing real-time detection of any unauthorized access or changes to networks and the files on them.
With the average data breach costing $9.4 million as of 2022, the ability to quickly detect hacks increases everyone’s trust in the integrity of the networks protected by these tools and mitigates the risk of the costs associated with them. Over time, these tools also increase customer trust in businesses and organizations that don’t suffer the same catastrophic data breach others do.
Tracking and tracing financial transactions on blockchains
So far, I’ve focused on how blockchains can increase our trust in the integrity of data and the security of both communications and networks.
However, blockchains can also be utilized to increase trust and transparency with regard to financial transactions.
On blockchains like BSV, all monetary transactions are sent peer-to-peer from one wallet to another. Every time a transaction is sent, it is time-stamped and logged on the immutable blockchain database. While information such as what transactions were for and between whom they were sent is strictly private and between the parties concerned, a transaction for X amount that took place on date Y at time Z will be visible to all.
This sort of open, transparent system can dramatically increase trust within organizations. CFOs can understand how corporate funds are being used daily rather than waiting until quarterly accounts are filed, dramatically reducing the risk of fraud and common business issues such as cash flow problems or misuse of company funds.
For public organizations such as government departments, citizens, journalists, and anyone else concerned can see how public funds are being spent, disincentivizing corruption and making it easier to prove when it does occur.
Trustless networks for a more trustworthy world
The implications of all of this are many, but they all lead to a more transparent, trustworthy world where various risks are mitigated for all types of organizations.
To make this world possible, massive scalable public blockchains will be required. Private blockchains, the equivalent of walled gardens, will not offer the same benefits since all parties involved in reaching a consensus on the state of a given ledger will be part of the same organization and may have incentives to alter data or erase records in some circumstances.
To learn more about the benefits of public blockchains or to share your perspective, ideas, or applications, join us at the London Blockchain Conference between May 31 and June 2.
We’re interested in hearing from anyone who has legal, legitimate ideas on how to use blockchain technology to mitigate risks and improve efficiency within all types of organizations. Register today to secure your tickets or to request a speaking slot!
Watch: BSV Blockchain A World of Good
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