In the shadow of the 2008 global financial crisis, trust in the financial system was at a historic low. Banks had failed, markets had collapsed, and confidence in central institutions had been deeply shaken.
It was in this moment of uncertainty that an anonymous figure, Satoshi Nakamoto, published the Bitcoin white paper – a nine-page document that quietly introduced a radical new idea: a financial system that would not rely on trust in institutions at all.
Rather than banks or governments, transactions would be verified by a shared digital network run collectively by its users – a system that became known as blockchain. But blockchain was never just about technology – it was about rethinking mechanisms of trust, so it could be engineered rather than delegated.
Nakamoto’s vision was made possible through a consensus mechanism known as “proof of work” (PoW), which required participants to solve complex computational problems to validate transactions. The system was intentionally costly to operate. That cost was precisely what made it secure: changing the shared record of transactions would require immense resources, making manipulation economically unviable.
But as bitcoin’s popularity grew rapidly – from a niche experiment in 2009 to a network processing hundreds of thousands of daily transactions within a decade – so did its demands. Maintaining trust through continuous computation proved expensive – not just financially but environmentally.
The energy consumed by PoW systems began to rival that of entire countries, raising an important question: was this the most efficient way to produce trust?
A blockchain revolution
In 2022, the major global blockchain Ethereum – which underpins the second-biggest cryptocurrency after bitcoin – adopted another model of trust known as “proof of stake” (PoS). This was a response to the growing concern about the bitcoin blockchain’s excessive energy demands.
Rather than relying on large numbers of computers competing to solve mathematical problems, PoS selects validators based partly on how much cryptocurrency they lock into the network as a financial stake. They then help confirm transactions and maintain the system, without the energy-intensive process of mining used in bitcoin.
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Ethereum’s energy consumption fell by more than 99% following the shift, according to the Crypto Carbon Rating Institute. This suggested blockchain systems could be used at much greater scale without proportionately increasing their environmental footprint.
This chart illustrates Ethereum’s claimed energy use compared with some other industries and activities, demonstrating the large drop after its switch from a PoW to PoS blockchain system:
Ethereum, CC BY-SA
However, this increased energy efficiency introduced another kind of trade-off. Under PoW, influence is determined by access to computational resources. Under PoS, it is tied to ownership of financial assets – raising questions about whether control of this technology would be increasingly unequal.
This is not necessarily a flaw, but a reflection of a broader reality. Trust is never costless, and different systems distribute that cost in different ways.
Today, many newer blockchain platforms including Ethereum, Cardano and Solana use PoS. Bitcoin, though, continues to rely on PoW – in part because supporters argue its high computational cost remains central to both its security and principle of decentralisation.
Beyond cryptocurrencies, different blockchain systems are increasingly being explored for applications ranging from tracking goods in supply chains and energy trading to digital identity systems and cross-border payments. And this is ushering in a third evolution in blockchain trust technology: “proof of authority” (PoA).
Trust reconfigured again
Unlike its predecessors, PoA relies on a limited number of pre-approved validators – typically, organisations whose identities and reputations are known. This means only approved or verified participants can validate transactions within a particular network.
PoA-style systems and permissioned blockchain networks have already been adopted or tested by hundreds of organisations worldwide – particularly in finance, supply chains and energy infrastructure. In finance, banks including JP Morgan have explored private blockchain networks where only approved participants can validate and share transaction records.
This might seem like a major departure from blockchain’s original ethos. If trust is placed back in the hands of identifiable institutions, what remains of Nakamoto’s decentralised vision?
But in many real-world situations, such as tracking goods or processing financial transactions, participants do not require anonymity. They prioritise reliability, speed and accountability.
Rather than eliminating trust, PoA reorganises it. Although blockchain is often associated with anonymous cryptocurrency activity, its record-keeping structure makes transactions highly traceable and easier to audit over time.
For banks, companies and governments testing blockchain systems, this approach is often more practical than fully open blockchain networks that anyone can join. Brazil has used a government blockchain based on proof of authority, and the United Arab Emirates has promoted blockchain use across its public services and for some government transactions.
What is emerging is not the end of trust but its reconfiguration. Blockchain began as an attempt to bypass traditional institutions. Its evolution points to something more nuanced: a future where trust is reconfigured with the involvement of banks, payment providers, technology firms, energy companies and governments.
These organisations are not removing trust from the system – they are reshaping how it is created, verified and maintained.
