Trust and the Viability of Cryptocurrency

Re:Trust and the Viability of Cryptocurrency by nexthash on Wednesday February 10, 2021 @05:47PM (#26095870)

I've said it before, and I'll say it again. Blockchain and decentralization does not produce trust and integrity. In this article the author gives a statistic: that fewer than 1/3 of Americans trust the financial system. And yet 95% of American households have bank accounts, thereby relying on it and giving it trust their trust through their actions. The key advantage of the current financial system is that there is somebody to keep accountable: the government and banks can be pressured and sued if they renege on their promises, and insurance/regulation can minimize loss.

For a cryptocurrency, if a smart contract has a bug, a hacker steals your crypto, you forget your wallet key, or an ICO goes bust you have zero recourse. Millions can be lost. Therefore, zero trust. By not placing trust in any one actor or system of recourse, you lose all hopes of accountability and are forced to view every person you transact with suspiciously. It's a shitshow that has generated the very thing it hoped to avoid: centralization into exchanges and government regulation. Read more about crypto's issues here:

https://medium.com/@kaistinchcombe/decentralized-and-trustle...

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Re:Trust and the Viability of Cryptocurrency by 4zrael on Thursday February 11, 2021 @01:11PM (#26105059)

I touch on a lot of issues you mentioned in the last third of the article. I agree that decentralization removes accountability, protections, and the associated trust.

Moreover, with crypto, we are trusting the developers of the underlying software rather than government institutions for fiat. I would argue there isn't a compelling reason developers should be seen as more trustworthy.

To be honest, I went into researching for this article with a bias against cryptocurrency, but ended with a belief that there is possibly an opportunity for fiat + crypto to form a more trustworthy system where transactions + the creation of new currency was logged where everyone can see. However, to actually realize this would require a lot of changes in current crypto architecture (particularly around the consensus algorithm and its current computation cost).

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Re:Trust and the Viability of Cryptocurrency by ostrophonics on Wednesday February 10, 2021 @07:22PM (#26096681)

decentralized financial protocols are making more bitcoin available outside of centralized exchanges than ever before. Ren for instance is a major custodial backing protocol that wraps bitcoin for trade through decentralized smart contracts representing market makers, lending protocols, derivatives, options, and other products. and people can buy insurance to protect their staked holdings against smart contract attacks; these policies are both fiat- and crypto-backed insurance policies, on- and off-chain.

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Re:Trust and the Viability of Cryptocurrency by nexthash on Wednesday February 10, 2021 @07:33PM (#26096768)

Sounds just like a bunch of bandaids applied to a deep gash wound.

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Re:Trust and the Viability of Cryptocurrency by space_rock on Wednesday February 10, 2021 @11:18PM (#26098208)

A system is not trustless if it has 100 points of failure and insider founders that built the system before it goes public

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Re:Trust and the Viability of Cryptocurrency by nexthash on Wednesday February 10, 2021 @11:52PM (#26098372)

And who's to say crypto doesn't have 100 points of failure or insider founders that built the system before it went public? Just remember the hacking, scammy exchanges, founders selling off failing coins and the early whales who mined tons of BTC before it became big and use it to manipulate the price. The difference is that fiat currencies are accountable, and thereby more trustworthy than crypto which has no accountability and nowhere to go to if you want to recover your losses.

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Re:Trust and the Viability of Cryptocurrency by space_rock on Thursday February 11, 2021 @09:42AM (#26101915)

I was talking about crypto and ICO scams

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Re:Trust and the Viability of Cryptocurrency by donclark on Wednesday February 10, 2021 @10:01PM (#26097773)

Does the USD produce trust and integrity - globally? (better than btc?)

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Re:Trust and the Viability of Cryptocurrency by nexthash on Wednesday February 10, 2021 @11:50PM (#26098361)

Seeing that the entire world uses USD as a reserve currency, and that governments won't touch BTC with a 10-mile-long pole, yes.

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