Contents

Not without trust

Trust is a precious resource, because it enables people to accept the risks of action and collaboration. Accordingly, the Toha system is designed to work with, not against, trust.9

Trust is not always an objective of decentralised finance (DeFi), which is more commonly associated with the pursuit of trustless exchange. Bitcoin was designed to be ‘an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.’10

For many types of financial transaction, such a system is sufficient. Further, by removing the need for intermediaries, it has virtues of efficiency and non-interference.

For impact investment, however, trustless exchange is not sufficient, because the investor wants to know that impact was created and sustained, and the contributor wants to know that they were not exploited in creating and sustaining the impact. There must be trust between the two willing parties, irrespective of whether a third-party intermediary is involved.

Consequently, it is not enough to create market infrastructure that facilitates exchange, it must facilitate trusted exchange. It must recognise relationships between verified digital identities and give assurance to investors who put their resources at risk for the sake of tangible impact. It must also give assurance to those in frontline communities who expose themselves and nearby ecosystems to investment and intervention, and who must share impact data for reporting and verification.11

This assurance need not be so faultless that it constitutes a guarantee. On the contrary, any system that can guarantee an outcome – such as Bitcoin’s cryptographic solution to the challenge of double-spending – is a system where trust is not needed. However, regenerative finance (ReFi) is inescapably entangled in the irreducible complexities of social and environmental measurement and verification. In this domain, there are no absolute solutions and, therefore, an essential role for trust.

Trust is vital in society ‘because we have to be able to rely on others acting as they say that they will, and because we need others to accept that we will act as we say we will’.12 Without this trust, it is difficult to sustain many of the institutions and interactions that we depend upon in our daily lives, let alone to scale up the levels of collaboration and cooperation that are required to effectively address climate change and biodiversity loss.

Therefore, trust informs the overall design of the Toha system – from its elevation of data sovereignty, to its arrangements for network governance, to its secure systems for payment and data management, to its utilisation of third-party expertise and intellectual property in its impact data technologies. Toha fosters a culture of openness to mitigate against deception and fraud, and also to enable scrutiny of whether actual impacts are aligned with societal goals, such as achieving global net-zero emissions or protecting existing ecosystems. Finally, the Toha system is designed to augment and extend the trust that exists in communities, rather than bypass or supersede it, because a trustful society has positive spillovers for any institution that operates within it.

  1. Thomas Hardjono, David L. Shrier and Alex Pentland (eds.) (2019). Trusted Data: A New Framework for Identity and Data Sharing. MIT Press.
  2. Italics added. Satoshi Nakamoto (2008). Bitcoin: A Peer-to-Peer Electronic Cash System.
  3. The East Coast Exchange (ECX) is a regional venture, launched in February 2023, which utilises Toha’s digital infrastructure to serve the East Coast recovery after Cyclone Gabrielle. It builds upon the trust networks that already exist within communities to foster exchange, expand the circle of generosity, and launch a series of mission-led pilots to address local challenges. See the ECX website
  4. Onora O’Neill (2002). A Question of Trust. Cambridge University Press, p.4.