Building trust in a trustless economy

Transparency aids activities like paying taxes. FILE PHOTO | NMG 

By MAX MUSAU

There is a feeling in Kenya and in other African countries that technology can solve some of our biggest problems, create new value and set new technological foundations for a brighter future.

Blockchain, as is commonly known, is one of the most trending technologies and its implementation of the distributed ledger and smart contracts have been held by some as a technology that will revolutionise how the world interacts. In Kenya, there are discussions between researchers,
government, and private sector groups, all sharing ideas on the possibilities of how this technology can be used to provide solutions.

One problem stands out: transparency. Transparency International ranks Kenya 143rd out of the 180 sampled countries in the Global Corruption Index. This is a low score and as we all know this is one of the biggest hindrances to economic development and it prevents governments from providing quality public service to its citizens.

As it turns out, Blockchain and its distributed ledger and smart contracts are uniquely placed to solve this problem. The distributed ledger in its design is meant to build trust among parties in a transaction or in entering an agreement by storing the details of the transaction in a public unchangeable ledger which is distributed and stored in the blockchain for all to see.

Here in comes the idea of using the blockchain distributed ledger and smart contract technology to add transparency and accountability to transactions such as paying taxes on goods, government spending, and, more recently, the proposed ownership transfer of land titles.

The problem is that a study by Jan Delhey and Kenneth Newton shows that African countries are low trust cultures where people are motivated mostly by the carrot and stick mentality as opposed to being internally driven and motivated. This manifests itself in citizens collectively in the form of a low regard for private property rights, low trust in the civil court system and democratic voting, and a voluntary disregard for tax payments.

The idea that the Blockchain and its distributed ledger and smart contracts will produce integrity is flawed because it does not make the information stored on it accurate or the people entering it trustworthy.

Max Musau, works at USIU Incubation and Innovation Centre.