For most of us, placing our trust in organizations, institutions and individuals that we don’t really know is often the only way we can get things done in today’s world. For example depositing money in a bank means that we are trusting the bank to return the funds to us when we ask for them, or pay bills when we instruct them to do so. There are many scenarios whereby we are required to deal with so called trusted third parties, or intermediaries, for everyday activities.

Of course most of these intermediaries prove to be trustworthy most of the time, but certainly not all of them or all of the time. And when one goes bad the impact can be devastating for the individuals affected. Just think of Madoff, or Enron or those individuals who were sold mortgages that they clearly couldn’t afford prior to the 2008 crash. It’s also the case that most of these intermediaries apply charges for their services, often significant charges, and they almost always introduce a time penalty to the transactions that you and I undertake. In addition, organizations that hold your personal information in a centralized database are clear targets for hackers.

The Equifax breach is a good example of an intermediary that collects and analyses your personal financial information for it’s own gain, only to have that data hacked. For the most part the collection of your data is undertaken without your permission, certainly without you having much control over how it’s used and absolutely without you recieving any payment for its’ use. And now your personal data could well appear for sale on the Dark Web because of a security breach in the Equifax network that never shoud have happened. You trusted Equifax, a well known, reputable intermediary, and that trust has proven to be misplaced.

So why do we need these intermediaries?

Well firstly they provide a central repository for information related to transactions which, in theory, is secure. The centralized nature of the repository (such as a database) means that you, the data owner, should be able to get access to your data, but only if the controlling intermediary gives you permission. The data should be accurate and up-to-date but it is, for the most part, up to the controlling authority to make sure this is the case. Secondly these intermediary organizations apply a degree of control over transactions which serves to make us feel confident that everything is legitimate and above board. This assumption is mostly based on reputation or brand strength, rather than any actual evidence. Finally intermediaries connect you with companies and individuals that you would not otherwise be able to deal with directly. How could you send money to a family member or business contact overseas without the help of Western Union and the intervening banks and other financial institutions?

We trust that these organizations will act honorably and also that they will (or can) confirm the legitimacy of the other party to the transaction – the recipient of your transfer, or your bill payment or your payment for a product or service and so on.

In general we’re ok with this because trusting a bank or a credit card company or Ebay or PayPal seems like a better bet than trusting the other, often unknown, party to any transactions or interactions that we undertake.

What if we didn’t have to trust the other party?

Imgine you didn’t need trust, or even know, the other party to any transaction and the necessary technology to deal with them directly was available. If you could be sure that any transaction you undertook with them would always be legitimate and executed as you intended, then you could confidently deal with them directly without any intermediaries. In this world there would be significant benefits including lower transactions costs, faster transaction times and you could take control of your own personal, financial, medical and social media data ensuring it was accurate and used only as you intended. You could even charge for the use of your data.

But how could this ever possibly work?

Well, what if all of the information required to execute any specific transaction were available to each party to the transaction in a decentralized network – as opposed to being held centrally by some intermediary such as a bank. Each party would have the same access to all of the relevant data related to that transaction, current and past. And what if that data were guaranteed to be accurate, up to date and exactly the same at each distributed point on the network? What if the network itself contained and adhered to the rules required to ensure that every transaction was legitimate and occurred exactly as the parties to it intended. Consequently, if any action was taken that did not meet the rules or requirements of the overall transaction it would be disallowed. Transactions would be unforgeable and unchangeable. And because the network is decentralized, you could transact directly with the other party or parties i.e. a peer-to-peer transaction model. Oh and finally what if the data were encrypted using an encryption algorithm that has never been cracked and that any human intervention in the operation of the network would be based on consensus and guaranteed to be in the interests of all parties to the network i.e. no bad actors.

In such a scenario, you could transact directly with any other party to the network without needing to know or trust them, you just need to trust the network. And you wouldn’t need any intermediaries! That’s right, no more banks. no more credit card companies, no more Amazon and in fact no more Uber or airbnb. The list of dis-intermediated organizations would be long and distinguished. No intermediary costs, no delays imposed by intermediaries and much less risk of the bad guys getting hold of your personal information by hacking some centrally controlled database.

Welcome to the Bitcoin blockchain network!

About Welford Management & Consulting

Virginia based Welford Management & Consulting LLC., offers expert advice, consultancy and support for blockchain startups, embryonic blockchain businesses seeking growth and enterprises looking to introduce blockchain projects or products into their organizations. Welford provides senior leadership and project management workshops to bring clients up to speed with blockchain and distributed ledger technologies and help define and execute blockchain projects and programs.

The company provides blockchain consultancy and resources in the areas of business strategy and planning, sales and marketing, market research and analysis, finance, funding and ICO support, software development and security and compliance. For more information about Welford, please visit or call 1 800 349 0323