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Trust is an essential, necessary and important word for everyone in their everyday dealings. Trust is important in business, interpersonal relationship, and every other aspect of life. The important of the trust cannot be over-emphasized.
What is trust?
Trust can be defined as confidence or reliance on some person/people or quality, dependence, reliability, belief, faith, hope etc.
Importance of Trust.
Trust in the financial system
Trust is very important in the financial system. This is why when a bank fails, measures are quickly taken to either pay the depositor or transfer them to another bank. The failure of doing this could result in systematic risk. Systematic risk is the risk that the failure of one bank will lead to failing of others banks.
Measures used to protect depositor in case of a failure of a bank which in turn improve trust in the system are:
Bridge banking- this is where a failed bank is being operated by the regulators until a buyer is found.
Mergers and acquisition.
Deposits insurance (deposit guarantee)
Trust in the blockchain
Just like the banking system, trust is as much important in the blockchain. The blockchain is made of two elements, the ‘Block’ and ‘Chain’. The block is an encrypted list of entries related to transaction while chain is the distribution of the documentation (ledgers in the block documented) among users. Trust in the blockchain is not from relationship between parties but from the technology itself.
The essence of trust cannot be undermined. Therefore, every business should establish or should be trustworthy in term of quality, deliveries, etc. for business to flourish and proper growth.