By Hannah Glass. King & Wood Mallesons’ Sydney office.
Trust in technology is a balance between accessibility and security. Accessibility because information must be able to be used by the intended people and security because others should not be able to access it. Managing these is a delicate balance.
New technologies, such as blockchain, present an innovative proposition for trusted systems. Blockchain is said to provide a perfect audit trail of encrypted, yet easily accessible information stored in that network. As the record of transactions is openly available and the process by which they are added to the recorded is decentralised, participants are able to trust the network creating a supposedly ‘trustless’ source of truth. Further any information held in encrypted form cannot be accessed without the requisite permissions creating a system of transparent, secure records.
But blockchains carry their own risks. Contrary to initial views, records on a blockchain are not immutable. If sufficient people in the network believe that a transaction should not be processed, the blockchain may split (“fork”) meaning that the sequence of events recorded on the blockchain may not precisely reflect actual events.
Nor are interactions with blockchains truly secure as humans usually access blockchains through intermediaries (such as exchanges or wallet providers) or smart contracts, exposing these transactions to traditional cybersecurity threats.
In trusting any piece of technology the transparency, encryption and security of each link in the chain all must be considered. If designed correctly, a blockchain can increase trust in a system. However, like any computing system, if it is poorly designed, it may still be vulnerable to data breaches.
Clearly no system is completely trustless. Instead you should consider the risks of each system, whether you are comfortable with these risks and whether these can be reduced or mitigated against by using another mechanism.