What Driver’s Ed and Police Departments Can Teach Us About Blockchain Adoption

Consumers don’t care about their data, but insurers might

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After months of trying to convince people that they should care about the flaws of centralized systems, I finally realized that most people don’t give a shit.

Why would anyone want to spend a considerable amount of time trying to understand that their data is not secure or that centralized banks create serious issues? My approach to blockchain education up to this point has been: (1) inform about the dangers of centralization (2) sell decentralization. This approach works for some but for the most part, people don’t care much about the security of their data or control of central banks because generally, . So most people have absolutely no reason to question the current system — in their eyes, it works.

The decentralized tech space, then, faces a crisis: we’re building technology to fix a problem that most people (a) do not understand as a problem and (b) do not care enough to learn about. While education and the legitimacy of trusted organizations could help people understand that there is, in fact, a problem, these efforts often resemble the likes of either a public service announcement or content marketing to sell decentralized technology — neither of which are sustainable in the long-term.

Ultimately, widespread adoption of any technology is based on a very simple cost-benefit analysis. So, the question is very simple: who stands to benefit most from decentralized technology? The answer might be insurance companies.

What’s most interesting about insurance companies is because their business model reduces risk, automotive insurance companies have been effectively subsidizing driver’s education for decades. Similarly, law enforcement insurance providers often hold local police departments to higher standards than they are required, by law, to abide by. Insurance companies have an incentive to reduce risk. When that risk reduction is directly related to what is best for society, the task of risk mitigation can be powerful. Ultimately, the incentives of an insurance company and their ability to leverage their power to change practices results in both safer roads and fewer police altercations. What if we applied the same logic to data security?

Cybersecurity insurance policies are becoming an important cost for businesses that store sensitive data about customers. For these companies, greater responsibility comes with greater risk (and higher rewards for hackers). In the same way that law enforcement insurance providers can use their leverage to hold departments to different standards than are required by law, cybersecurity insurance providers can hold companies they insure to higher standards than is required by consumer protection laws that span beyond current protections (like GDPR). In the least, insurance agencies can incentivize more responsible practices by offering lower premiums and added benefits for companies that abide by best-practices, which could very well include blockchain.

Ultimately, as data breaches continue and large corporations become targets for their wealth of data, liability for these corporations grows. On the other hand, we see the emergence of “be your own bank” in the blockchain space — but there is no reason to stop at bank. Blockchain could allow individuals to take on the liability of their own data, shifting the responsibility from organizations to users. While it is unlikely that projects like Brave (the browser that pays users directly to show them advertisements and blocks most other ads) will single handedly drive this shift, insurance providers, who stand to see huge financial benefits from this shift, are more likely to become more actively involved in changing the practices of corporations that house sensitive data today.

A thanks to Brian Flynn for encouraging me to start writing again and for giving fantastic feedback on this piece.

Co-founder @ Decentology | Studying @Umich

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