Trust and verification are becoming increasingly important. Blockchain guarantees that trust, becoming a crucial tool if you’re growing your start-up
The first quarter of 2022 saw a record-breaking £9bn being raised in venture capital by UK tech start-ups and scale-ups. The UK is in second place after America when it comes to tech start-up venture capital investment, ahead of India and China.
However, according to start-up financier FundSquire, around 20 per cent of start-ups are dissolved in their first year.
Having worked with start-ups as well as industry leaders, we have seen how blockchain technology can play an important role in helping businesses grow from Davids to Goliaths.
‘Blockchain creates an explicit, collaborative and undeniable trust in records that enables quicker and safer transactions’
Transparency and trust are becoming much more of a hot topic for consumers and businesses. This means there are increasing opportunities for a start-up to leverage emerging tech like blockchain into its business model. With this, they can fill gaps in the market where explicit trust can deliver that all important competitor advantage and consumer benefit. And, in doing so, differentiate themselves from other brands to turbocharge growth.
All three points relate to explicit trust.
In his keynote address at a Hyperledger Global Forum on security, trust and blockchain, renowned American cyber privacy expert Bruce Schneier cited the book Blockchain and the New Architecture of Trust by Kevin Werbach.
The book, said Schneier, “outlines the following four different trust architectures”, ranging from “peer-to-peer trust” and “intermediary trust”, such as PayPal, to “distributed trust”, which is what blockchain enables, creating a trust in the system.
Of course, as Schneier said in his speech, this trust is a human trust in the system and its operators. But blockchain provides layers of assurances and indisputable facts to help cement explicit trust. It goes beyond anything in operation today and is the next evolution of the trust architecture makeup.
By embedding themselves into these trusted networks, start-ups are placing themselves in a winning position to survive and thrive. But how exactly does blockchain ensure this trust? And how can start-ups use it to accelerate their growth?
Blockchain provides a secure digital distributed ledger that connects multiple participants to one source of data – the golden record of truth. This can be leveraged to implement seamless business processes that involve various participants and eliminates the need for issuing paper-based certificate credentials.
The authenticity of these digital certificates can be verified by anyone instantly using blockchain, without depending on the manual intervention of the issuing authority. Crucially, the digital medium is protected with cryptography.
The key to this protection and explicit trust is cryptographically hashed data. The classic example is an events company using blockchain to issue tickets and, crucially, to facilitate any secondary sales or resells. Ticket scamming is a familiar issue. But with blockchain, ticket buyers get a key on purchase that is able to unlock the unique public “ticket address”, and therefore they can prove they are the true owner.
It’s a cocktail of an open network combined with hashed data and cryptography to produce a fast, safe and efficient way of securing certification and verification.
Blockchain provides immutable and transparent transactions. The decentralised and distributed ledger also eliminates any process of reconciliation and settlement.
In the current climate, transactions are verified by a central authority. Blockchain replaces these centralised processes with decentralised ones, meaning that a collaborative range of users can verify items.
What transpires is a transparent log of records. When data is sent out by users, it’s time stamped and added to the chain in chronological order. The hash mentioned above links the blocks together and secures the chain, making it virtually unmoveable. Hence the name blockchain.
For example, when it comes to record keeping, the undeniability of an event means that companies can’t object to compensation claims made by other users. Blockchain can make sure that there is non-repudiation.
Public blockchain is highly secure and practically impossible to counterfeit due to the underlying cryptography used. While companies may attempt to manipulate private blockchain records, an independent auditor can monitor mischief in the network. Blockchain provides the trust and security needed for multiple organisations to connect on the shared ledger.
This is because all users have access to a copy of the whole blockchain, meaning they can see if any meddling is going on. If there’s a hash match throughout the chain, the records are trustworthy.
Furthermore, smart contracts represent the future of transactions and are interwoven with blockchain. Smart contracts are a piece of code that can outline each step of a transaction, with the ability to connect multiple blockchains and assets. When terms of the contract are met, they are automatically initiated. For start-ups, these coded contracts can revolutionise the way they conduct business.
For example, smart contracts are perfectly suited for supply chain management. They can enhance the traceability of transactions, tracking products as they move and initiating costs when necessary. Crucially, there is no need for a middleman.
There’s always a risk and cost with any new technology – and blockchain, for many, will seem a leap into the unknown. But for a start-up in a position of innovation and new territory, the jump into blockchain is particularly relevant.
We all need trust to negotiate business effectively. Suppliers and consumers are latching onto the trend of broadening their awareness of trust and security concerns. This, in turn, is increasing the number of use case opportunities for blockchain to support and prove its worth. Blockchain creates an explicit, collaborative and undeniable trust in records that enables quicker and safer transactions.
The technology is primed to take over. As a start-up looking to turbocharge into the market, why not harness the explicit trust and security provided by blockchain? Ultimately, with a secure foundation built, the sky’s the limit.(Original Article: View article on Information Age Here )
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