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Trust in a Decentralized Ecosystem

Satoshi’s vision for Bitcoin was to build an economic vehicle that did not require a trusted agent. This is often called a ‘trustless’ system of payment. His justification for launching Bitcoin was that the trusted agents could no longer be trusted. Specifically, the trusted agents had become corrupt, and people needed a method of commerce that did not require third parties. What is lost on many people is that this new system still required trust.

For currency to work, we must believe in it, we must trust it has value, and we must trust the person or smart contract we are interacting with will utilize our money the way we intend. Ironically, at the heart of the decentralized trustless ecosystem is still trust.

What is Trust?

Trust is the belief that an object or a person actually possesses the attributes that you have not verified recently or directly. An example I like to give in a discussion like this is the chair you are sitting in now. When you sat in it, did you check it? Did you test it? Did you place a little pressure on it before you plopped down into it? Probably not. That is because you trust your chair. This is not the first chair you have seen, and you have probably used that particular chair for many days, weeks, months, or years. You trust it.

The same is true for hundreds, maybe thousands of acts you have or will do today. Humans trust, a lot. The brain is efficient, and it knows better than to prompt you with “Are you sure you want to sit in that chair?” before you sit down in every chair every day. So what did Satoshi actually build if humans still have to trust, and frankly are fine with trusting? What problem did he actually solve?

The Myth of Decentralization

Satoshi removed centralized trusted agents, but only somewhat. The invention of Bitcoin did not remove all central authorities from our ability to perform peer to peer financial transactions. Bitcoin removed a lot of them, but Bitcoin is not in its own world. Bitcoin sits in the context of society, the larger economy, and the greater technological context. Bitcoin is tied to fiat, tied to exchanges, tied to Internet Service Providers, with some wallets, it is tied to your phone manufacturer. In society, Bitcoin is feared, it is loved, it is hated, it is cheered, and those emotions have driven centralized agents to act on the Bitcoin ecosystem.

>> Abra CEO Claims SEC Will Approve Bitcoin ETF Within the Year

While Bitcoin is a move toward decentralization, complete decentralization is a myth. Has crypto freed the user? Yes, to a degree. Is crypto the ultimate freedom? No, not even close. There is more work to be done to utilize blockchain for freedom, and I believe Bitcoin and Ethereum are doing that. But more is needed and if you are reading this, that task falls to you, so get involved. You ARE the early adopters!

Featured image: DepositPhotos /© PromesaStudio

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