The main benefit of web3 technologies like blockchain is enabling transactions with low trust

Date created: 2021-12-13

We usually rely on entities like the government for our transactions and commitments, for example proving that you are you, indicating the value of your bank account, proof of ownership etc. They are upheld by authority of the government.

With things like blockchain technology we can circumvent the authority, we don’t need to trust that someone else will ensure the contract is executed. Instead we will have a transparent record of the contract and specify beforehand what will happen if it is not executed the correct way.

Trust-less commitments give us a different way forward though. You could specify the amount needed and contractually state what is allowed to be done with it as well as contingencies for if those obligations aren’t met. Once submitted, that “contract” will be carried out exactly as specified. It is observable to everyone, debuggable, and non-falsifiable. So as a community we could come together, raise $2k and require that the person who is going to purchase the physical supplies also puts in 2k as collateral. In the event that the community votes that the funds were misused, the person loses their collateral and everyone is made whole again. Now everyone involved needs very little trust in each other. If enough money isn’t raised, everyone gets their money back. If you tried to make off with the 2k, it’s a wash because you just lost the 2k you put up yourself.