Can trust be digitized?

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An article by Reinhard Clemens, from 2007 to 2017 Member of the Deutsche Telekom AG Board of Management and CEO of T-Systems.

Reinhard Clemens, Member of the Deutsche Telekom AG Board of Management and CEO T-Systems

Reinhard Clemens, from 2007 to 2017 Member of the Deutsche Telekom AG Board of Management and CEO of T-Systems.

As robots get more and more human-like, and take over more and more of our tasks, many people will look on with a feeling of helplessness. They will worry about losing their jobs – and about losing control over their futures. Digitization, if it seems to be moving forward uncontrollably, can indeed cause anxiety – digital anxiety. What we often forget is that we are the ones who are giving robots their brains, and thus we are the ones responsible for deciding how smart they become. And if we can lock those programmed brains into fixed boxes – fixed scopes of action – from which they can't escape, then we can reduce the anxiety. I call my recipe for doing this "smart, careful digitization with a sense of proportion." It's a recipe for the kind of digitization society will accept. And a key technology ingredient for this recipe could be ... blockchains.

Blockchain technology can do more than just produce Bitcoins. For example, it can bring a completely new dimension to supply chains. Let's say you want to buy a new car. You configure your dream car in the Internet and request an offer. A dealer contacts you, quotes his price and gives you a rather vague delivery date, such as "this fall." So you accept his terms. So far, so good – semi-digitally, that is. Now, all you can do is wait, and hope that your car will be ready soon, and that it will have all the extras you ordered. But how about if you didn't have to rely on a dealer? And if you could get a firm date and time of delivery, and your car would be delivered right on time, down to the minute? And if you could be sure, in the whole process, that there wouldn't be any mix-ups? So you wouldn't get racing seats, in black leather, instead of the regular seats, upholstered in blue-patterned fabric, that you specified?

Transparency engenders trust

All this is possible in fully digitized supply chains. Every step is digitally recorded, including every action carried out by any and all suppliers and subcontractors, and each and every production step at the factory. In the Internet of Things, and the Industry 4.0 world, such recording will take place automatically, with blockchain technology. Every transaction will create a digital "footprint," and thus be transparent, secure and traceable for all parties involved. This is how blockchain technology is already working with digital currencies, and how it will work with a raft of ingenious new applications.

Everything that gets stored in a blockchain stays there, permanently. Anyone can see the content of a blockchain and make additions, but no one can change existing content (Google Docs could be a simple and useful analogy). How does it work?

A blockchain is stored as a database. But instead of being centrally stored – in a data center, for example – it is stored in a distributed fashion, with its users. All of its data are located in nodes that anyone can open. Every node contains the same data, i.e. is a duplicate of all the others. The database consists of a list of enchained blocks. Individual blocks are linked, in a cryptographically secure manner, with their predecessors and successors. Each time they are booted, nodes refresh themselves to the latest status. In the process, a node checks whether it has a correct copy and whether its information status is the same as that of all the others. When a new block is added, each node always checks it for correctness and then, if the overall synchronization status is up to date, adds it to its own copy. Blockchains continue growing in this manner. And they make fully digitized processes so robust that they become virtually invulnerable. Nothing happens that is not supposed to happen. This is why this technology is so attractive, for example, for machines that are involved in production 4.0 processes and exchange data fully automatically.

Digital value system for machines

Many people are concerned that this technology entails a loss of control, because it functions without human intervention or mediation. It's only a small step from such concerns to worries about the digital world becoming a mystery that is to be feared. But let us never forget that we are the ones who are creating these machines. We program them, and we give them the capability to interact among themselves, to negotiate with each other and to organize their own actions. Similarly, we can use blockchain technology to give them defined, unchangeable, transparent scopes of action – and, thus, to eliminate many fears about all things digital. Over time, this approach could even lead to the creation of a digital value system, consisting of accepted norms that machines would have to obey.

We could do this by linking blockchain technology's tamper-proof-storage function with executable program code. That would give us "smart contracts" defining the conditions under which decisions or actions would be taken. Blockchains themselves contain no "if-then" functionality; they can only store records. But smart contracts, consisting of code written into blockchains, can provide such functionality, and thus they can be used to robustly define scopes of action for machine-to-machine communication. I find it comforting to think that this approach could be used to document and order the actions of future robotic "personalities" with artificial intelligence.

Moving securely toward the digital workplace of tomorrow

Blockchain technology is a connecting technology that functions without central elements or mediators. It will thus radically and permanently change business models and products. In direct transactions, it can be used to send – securely, and transparently, for all parties concerned – verified, trustworthy information of clearly identifiable origin. It can thus digitize trust between transaction partners, thereby providing an important contribution to digital responsibility. One paper produced by the Bitkom digital association notes that "A significant number of blockchain pioneers are located in Germany." As an employee of Deutsche Telekom, and as a "digitization optimist," I'm delighted to see Europe capitalizing on its opportunities in this area.

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