[MUSIC] Welcome back. In this video, we'll discuss how to establish trust in the digital age. First, let's nail down what we mean by trust. Trust in business is the expectation that the other party will act with integrity. And integrity boils down to these four values: Honesty, consideration, accountability, and transparency. Honesty is not just an ethical issue, it's an economic one. And communication is the key to creating trusting relationships within employees, partners, customers, shareholders, and the public. When a person or an organization makes a statement, it must be truthful, accurate and complete. Honesty also means no lying through omission. And it means not trying to hide ugly facts in a maze of other facts and figures. Honesty demands you be upfront. Second, consideration means that in any transaction, all parties care about the others and will operate in good faith. Trust requires a genuine respect for the interest of the other party, so that everyone can operate with good will. If I'm negotiating with you I actually care that you get something out of the deal. Accountability means making clear commitments and sticking with them. Individuals and organizations must show they keep their promises and own up to any that they're broken. Everyone involved should be able to verify this and outside experts should be able to do so as well, not passing the buck and no playing in the blame game. And finally, transparency means operating out in the open, in the light of day. If you're wondering what the other party is hiding, that's a sign of poor transparency, and poor transparency leads to distrust. Of course, companies have the right to guard their trade secrets and other kinds of private information. But there are things that we need to know, as customers, as shareholders, employees, and so on, for us to make smart decisions. And we shouldn't have to fight for this information tooth and nail. Being open is very important. To quote from a previous book of mine, "Corporations can undress for success." As we speak, trust in business and other institutions is at an all-time low. The public relations company Edelman, in their 2018 "Trust Barometer" it shows trust in institutions has taken a staggering hit in the last period. In the United States, faith in government fell 14 points to 33%. Business, media, and NGOs also suffered drops of 10 to 20 points. Although technology is the most trusted industry, social media companies like Facebook, and Twitter, have been used to manipulate public opinion. And that erodes trust in those services too. But it also endangers our trust in each other. For the first time, media, the fourth estate, is now the least trusted institution, globally. In 22 out of the 28 countries Edelman surveyed, people distrust the media. Nearly 7 in 10 people worry about fake news being used as a weapon. Traditionally, trust in transactions came from individuals or groups acting with integrity. We did business face-to-face with people we knew. Now we often can't know who we're doing business with online let alone whether or not people have integrity. So we've come to rely on third parties to vouch for strangers. Not only that but third parties also record transactions and do everything behind the scenes to make online commerce work. These intermediaries can be banks, governments or businesses like PayPal, Uber, or Apple. And when they get involved, they charge for their involvement, they get a piece of the action. Now with blockchain, trust doesn't need to be established only by a third party. And smart third parties can use blockchain to build new levels of trust. With blockchain, trust comes from the network itself. Instead of simply trusting a middleman institution, we can trust the blockchain code. The way that the blockchain is built means all parties in the system, not just the ones involved in the transaction, come to an agreement on what the facts are. And once they agree, a new block is added. The transaction becomes a solid fact and part of the blockchain's history. The ledger itself is what the trust is built on. Now to be clear, the trust we're talking about refers to buying and selling goods and services, not trust in all business affairs. Still, a solid foundation of trust can create a more secure and trustworthy world. By conducting transactions on the blockchain, companies might enjoy a bump in share price, because their business is above board and verified. Shareholders will come to expect all publicly traded firms to run their businesses near treasuries on blockchains. Citizens will expect the same of government organizations, their taxes paid for. With this transparency, investors will be able to see whether a CEO really deserves a fat bonus. The smart contracts, parties will keep their promises automatically. Voters will also be able to see whether their representatives are acting with fiscal integrity. The transparency and trust built into blockchain will start to rebuild the trust in our institutions. In our next lesson, we'll take a closer look at exactly how transactions happen on a blockchain and what happens behind the scenes to make it work. To learn more on the achieving trust, see the first chapter of Blockchain Revolution. And if you have questions, please post them to the discussion forum, we'd love to hear from you.
