Blockchain restores trust in financial transactions

Trust is the foundation on which social, economic, and political relationships are built. Traditionally, trust management has been centralized in state institutions, such as governments, notaries, and regulatory bodies. These entities ensure contract enforcement and protect citizens' property rights. However, the global landscape has changed rapidly, and other business models have emerged as reliable alternatives.

In recent years, we have seen a decline in people's trust in state institutions. Corruption scandals, administrative inefficiencies, delays, lack of transparency, and the perception that these institutions cannot keep up with technological advancements have all contributed to this crisis of trust. This raises a crucial question: how can we restore and strengthen trust in an increasingly complex and interconnected world?

This is where blockchain technology emerges as a potentially transformative solution capable of significantly reducing transaction costs. Blockchain is a distributed and immutable ledger that offers a reliable alternative without relying on central authorities. Instead, it operates on a decentralized network where each transaction is verified by multiple participants, thereby ensuring greater transparency and security.

This new technological approach challenges the traditional role of state institutions in building and maintaining trust in society. Historically, state institutions have been compulsorily established as monopolistic guardians of public trust, ensuring that social and economic interactions occur fairly and predictably. However, this trust was not earned; it was imposed by law.

A 2017 Pew Global Research survey illustrates the level of trust in government institutions in various countries. The survey shows that, in Latin American countries, only 24% of the population trusts the government to do what is right for the country, with a figure close to zero demonstrating full trust. This low level of trust is symptomatic of structural problems such as corruption and administrative inefficiency. These factors undermine public trust and negatively impact economic development and social cohesion.

In this environment of distrust, blockchain technology emerges as a key player. Blockchain is a distributed ledger technology that allows the creation of a secure and transparent digital ledger. Each transaction or record is verified by a network of computers, eliminating the need for a central authority. This consensus mechanism ensures all network participants can access a single, unalterable data version, significantly increasing transaction trust.

By offering a way to manage trust in a decentralized and immutable manner, blockchain eliminates the need for intermediaries. The technology can be applied in various areas that traditionally depend on centralized intermediaries, such as public registries and regulatory bodies. Blockchain's security is based on advanced cryptography, which protects data from unauthorized access, making it less vulnerable to cyber-attacks. Each transaction is recorded in a block that is visible to all network participants. Once a block is added to the chain, it cannot be modified or deleted, ensuring the immutability of records. The fact that blocks cannot be altered is crucial to ensuring that all updates are verifiable and secure, increasing trust in the authenticity of records and reducing the risk of forgery.

In this context, registry institutions can be replaced or have their functions integrated into the blockchain, allowing real estate transactions and other records to be carried out more quickly and efficiently. This change can significantly reduce associated costs, especially for verifying paper documents. Moreover, blockchain's robustness makes it difficult for fraud to occur in public and notarial records. Once a record is added to the blockchain, it cannot be altered or deleted without network consensus, ensuring that any attempt at fraud or manipulation is easily detected and corrected.

Blockchain adoption is not just a technological solution but a paradigm shift in managing security. By utilizing this technology, we are building a future where trust is not imposed by centralized intermediaries but rather by a system that benefits everyone. Major financial institutions have already recognized the potential of blockchain and are implementing it in their operations. In the coming years, blockchain will become one of the key tools in restoring public trust and reducing transaction costs, marking a significant advancement for society as a whole.

With blockchain, we can restore public trust, reduce transaction costs, improve process efficiency, and create a more secure and reliable environment for transactions and property rights registration, marking a significant leap forward for society.