Anshul Khandelwal


The Blockchain Implementations- Reputation System

Photo by Markus Spiske on Unsplash

The Blockchain is an interesting technology. If it can be implemented in its real sense it has the potential to change the world- not sure for good or for bad. There are of implementations of blockchain that if done will alleviate lives for a lot of people, reduce corruption, increase accountability and increase the living standards for everyone. 
In this post, I will talk about the possibilities of a Reputation Management System which we are envisioning and what are the possible options to make it work. 
For beginners let’s start with what is Blockchain, then we will move onto Reputation management and then how to make it work.
I am sure even if you are new to blockchain you have heard this name quite often now. Please note Blockchain is NOT Bitcoin or vice versa. Bitcoin is an excellent implementation of the blockchain. And the broader class of these is called cryptocurrency. Bitcoin is the best and most adopted cryptocurrency. 
Simply put blockchain is a register that keeps all of your records. It is a distributed ledger. Distributed because it is not on just one node (or a computer) it is spread across multiple nodes and hence distributed. There are seven basic principles on which blockchain rests:

1. Privacy

How to works- In today’s internet world all the big companies sell our data including Facebook, Google etc. The only thing we get in return is a Terms & Privacy Agreement that we have to agree if we want to use their services. Well it is our personal data and if a company is selling it we should get something in return or they should not be able to sell it without permission. The idea is power should lie with the person whose data it is and not some entity whose service we are using. Basically, these products (Facebook, Google etc.) work because we use them if we don’t use them they will not work.
With blockchain Instead of big corporations controlling your data, you control your data. The blockchain as a technology does not know who is using it. No one needs to provide an email, contact information or anything to download and run bitcoin software.

2. Security

This is something we need immediately. We all come across credit card frauds, stolen passwords etc. The list here is huge.
The blockchain is a distributed technology, so there is no central control and no one point of failure. Even if one node is compromised only that particular user may get affected and not everyone else on the blockchain.

3. Distributed Power

The blockchain is a distributed system. The power does not vest into a single central authority. There are no intermediaries. No single party can shut down the system. Even if multiple people shut down the system the blockchain will still run. The energy cost (amount of electricity) involved in breaking the blockchain will be very high.

4. Value or Incentives

What is happening right now- We all know about the huge bank scams, how people with so-called reputation are able to extract huge loans on their terms. There is no full proof way to detect issues. CEO’s and other top brass get huge incentives while the other workforce remains as is. Overall the difference between rich and poor is always growing. The wealth of the world is concentrated in the hands of few only.

In a blockchain system, every stakeholder has incentives aligned with them. The more energy you are ready to put into the system the better returns. Your reputation is very important, similar to how it works in the real world. But the way reputation is calculated is based on the actual work you have done in the system. Remember a blockchain system registers every transaction ever happened. And hence the reputation can be verified. In a blockchain economy, the power is less concentrated. I am not sure as of yet if it can be completely decentralized.

5. Rights

Enforcing intellectual property right are a nightmare in the real world. Take an example of the music industry, pharma, technology, real estate or any other such industry. Patents and intellectual property rights have always been a pain. Land rights are a classic case. 
In blockchain economy using smart contracts, the rights can be enforced and if someone tries to outsmart the system can freeze their assets and notify everyone in the blockchain system about the fraud. As such it is easy to manage and maintain the law.

6. Network Integrity

The blockchain system is spread across multiple nodes. There is no single control center. Every transaction ever made is recorded. This enforces integrity in the process itself. If someone wants to behave without integrity the cost of doing so is very high. It also solves the double spending problem in virtual transactions. The same dollar cannot be used twice, which typically has been the problem with our banking systems. The blockchain solves the double spending problem with consensus mechanisms (proof of work). In Bitcoin, the blockchain system timestamps the first transaction (for a coin) and any further spend is rejected.

7. Inclusion

The blockchain, for the first time in the history, gives an opportunity to bring everyone under the umbrella. The economy should work for everyone, blockchain can make this happen. 
Millions of people are still unbanked. The developing countries people cannot afford to have a minimum balance in their account or there is no bank in the vicinity. A blockchain enabled banking system can empower people with mobile phones to get access to banking services with micropayments and at extremely low costs. Their data on the blockchain can be used for verification hence reducing the cost for KYC. This enables them to contribute towards the economy. 
With a blockchain system in place money distributed for aid purposes can be tracked down to the penny. This can have a huge impact in the developing countries.

One of the best implementations of blockchain is the Bitcoin. Bitcoin is implemented using blockchain technology. Every transaction that has ever been carried out has been recorded and stamped by other nodes stating its validity. That transaction stays there, and anyone can view it. Check here.

An interesting analogy can be from Hindu Mythology. In Hindu mythology, there is a god who keeps an account (ledger) of who has done what (karma) across their multiple lifecycles starting from the beginning. He is called “Chitragupt.” And everything you come across in your current birth is precisely based on what you have done previously. This is exactly what blockchain does. It is the account/ledger that keeps all the records from the very beginning. This sounds scary that all of our data/ actions are recorded and never deleted. That is the power of a system using blockchain.

A Reputation Management System

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Imagine you have a software that runs on top of a blockchain like Ethereum or any other. The system gives you incentives to use it. By use I mean the more information you provide to this system the better it works for you. The important part is you decide what you want to share. You can share your social profiles, your bank account details, answer questions that system throws at you, the same will be verified by your social profiles.
This system than derives a reputation score from your social and economic factors, your actions and other attributes. Once you have used the system enough it will give you ratings based on your transactions. All your transactions are on the blockchain and you can view them. This collated ratings can be used to get access to funds, get utility connection, admission to colleges etc. It is a form of eKYC (Know Your Customer) totally based on what you have done. It does not require your proof of address, email, phones etc. 
To implement such a system we would need to build an ecosystem. Integrate this reputation system with other businesses like banks, utility providers, schools, wallets, etc. If someone has a bounce cheque the Reputation system gets the data from the bank and the this information is registered in the blockchain.
The important challenge here will be to build an ecosystem that will accept these ratings and consistently provide this system with data to bring its ratings closer to reality. This will massively simplify the current processes. Users will be able to get quick loans based on their reputation ratings. The blockchain knows based on your transactions that your probability of repaying the loan is extremely. Since the system is using blockchain security is there by design.

Will be writing more on it soon.

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