Trust Me, Trust Me Not
A breach of trust is one of the most heartbreaking experiences a human can experience: Discovering a spouse’s affair; Having a best friend turn on you; Someone you deeply care about failing to fulfil a promise; Being unable to get back your money…I was betrayed, deeply affected by its profound aftermath impact. When we trust someone, we give them the power to hurt us.
Around the matters that can be managed by contracts, trust looks a bit more protected. Essentially, what we trust is not the contract itself but the judicial system that governs it. We believe if the other party fails to fulfil its commitments or hurts us, we can rely on the legal system to protect our interests. But did the system ever fail its people? So many times.
The United States betrayed the gold-backed currency system. Countries holding US dollars, attempting to redeem them for gold, were met with Nixon’s unilateral suspension of the dollar’s convertibility into gold. This monumental moment marked the depegging of fiat money from gold, shifting reliance purely onto the economic and political stability of the issuing government.
The Cyprus government betrayed their people. People’s despair soared as they rushed to banks and queued at ATMs, trying to withdraw their life savings before a levy was applied to their bank accounts as part of a bailout agreement with the EU, only to find their money was at the mercy of the banking system.
Hong Kong’s pension fund system betrayed its resident workers. Those who expected to withdraw their invested pension funds upon permanently leaving the territory discovered they could not do so.
And most recently, Kraken betrayed my trust. Out of the blue, Kraken asked for additional KYC and after providing the required information, boomed, my account got blocked. I could do nothing with my account and money other than contact customer care. I felt how stupid and vulnerable I was, leaving my money at the mercy of others.
People who were betrayed in intimate relationships find it challenging to love again, people who were fu*k by the authoritarian establishment find it hard to trust them again. Giving trust to others makes us vulnerable. We seek to choose a reliable partner, vote for a trustworthy government, and aspire to live in a fair and well-established jurisdiction, all to diminish the potential harm a betrayal of trust could inflict on our lives.
The Elements of Trust
What is at the heart of trust? How do we define a trusted person, entity? I break down the fundamental elements:
They fulfil their commitments.
They honor their promises.
They are truthful and do not deceive.
They do not cause harm.
They have and adhere to clear and established rules.
They act predictably.
They don’t give unpleasant surprises.
They maintain stability and consistency.
They do not alter or manipulate the facts.
They are open, transparent and verifiable.
A lot to ask? The complexity of human and social dynamics introduce many unreliable variables into the game. No one can guarantee the fulfilment of all the traits consistently.
But do we have to trust?
Trustless
Trustlessness is a new paradigm enabled by blockchain technology, which means no need to trust. Essentially, Trustlessness removes unreliable human factors from the system and ensures the system runs as it should. A trustless system operates strictly according to predetermined rules and has no capability to do evil. How to achieve it?
First of all, we need a trustless infrastructure, which is realized through decentralization. A decentralized network is one run by multiple independent individuals who don’t know each other. They must reach consensus for every transaction that happens in the network. In very simple words, no one is the boss, everyone in the group has a say, and they all must agree before any decision is made. Also, the rules about how the consensus is reached are fixed and cannot be changed. Everyone is expected to operate according to the rules. If someone deviates from the rules, his input in the network will be invalidated. Decentralization gives the network the power to resist attacks from a single, centralized force, and guarantees correctness, transparency and neutrality towards its participants. As such, a decentralized network is predictable, deterministic, and immutable, manifesting all the fundamental trusted elements.
The best example of a trustless network is Bitcoin. Bitcoin’s trustlessness is manifested through its robust and decentralized hashrate, with over 18,000 nodes distributed across the globe, and a deterministic Proof-of-Work consensus mechanism. The mainstream narrative about Bitcoin made a 180° turn over the years, moving from a vehicle for pure speculation and illicit transactions to being recognized as a store of value. Since we don’t trust each other, encompassing individuals, financial institutions, and sovereign states, we choose to trust a trustless asset.
Though I’m not here to explain Bitcoin, presenting it in comparison with fiat money helps vividly illustrate the difference between trustless and trust-based money.
Monetary supply: Bitcoin has a maximum supply of 21 million. Fiat money has no fixed supply limit, its supply is regulated by central bank policies.
New money in circulation: New bitcoin is created through mining governed by a deterministic algorithm and has a fixed schedule of halving where the reward for mining a new block is halved. Fiat money is created by central bank policies.
Decision-making: Bitcoin uses a deterministic Proof-of-Work consensus mechanism to achieve consensus across the network. Fiat money is regulated by central bank policies.
Immutability and Transparency: The Bitcoin network’s transactions are recorded in the decentralized public ledger, which cannot be altered. Fiat money transactions can be altered and disputed in traditional banking systems.
One side is the deterministic, decentralized consensus, immutable Bitcoin, on the other is the central bank policies created by fallible humans with changing agenda and political influences.
Trustlessness gives Dignity
Have you ever felt a loss of dignity in an imbalanced relationship with a partner, a monopoly service provider, banks, and authorities?
A controlling, distrustful partner requires the other to be open about their whereabouts, whom they meet, and access to their phones, which I refer to as “enforced verification”. This behavior is based on the presumption of potential unfaithfulness. An abusive relationship, right? Yet, we seldom recognize that this is the same relationship dynamic we have with authorities. They require us to prove our legitimacy by providing deep-level personal information, they want to know everything about us in order to “protect” (control) us. Only when we satisfy these requirements are we granted an ID, a bank account or the right to do something basic. Have you ever thought about that having a personal ID to identify a unique living individual, or a bank account to access basic financial services, should be a given right rather than a privilege? Some argue that “enforced verification” imposed by authorities is necessary to prevent crimes and maintain systemic integrity. However, when similar behavior occurs in personal relationships, It is commonly recognized as a lack of mutual respect and affects personal autonomy. A significant double standard. While mutual trust is encouraged in personal relationships, such mutuality doesn’t need to exist between citizens and the government. In the civic context, citizens must prove their trustworthiness to their governments, not vice versa. How fair is that?!
People who have always been in toxic relationships don’t know what a healthy relationship looks like. We have the same issue with authoritative establishments. If all the way they tell you what you experience is (toxic) love, how can you know what is the true love that sets you free? I’ve interviewed more than 100 people about their crypto habits and opinions. When asked about their feelings about KYC (Know Your Customer), the wildest ones practically say “I stay away from it”; nomads and exiles hate it because they continuously change places and fail to provide proof of residence; the submissive ones are forced to comply if not they can’t do xyz and get their money back; the good citizens acknowledge their perceived benefits of KYC but resign themselves to it, because ‘it is required everywhere so I have to comply’. None of them is criminal…
In fact, we don’t have to comply, even in a small aspect. The power that cryptography gives to individuals is significant enough to initiate a change in the rules of the game.
On blockchain, anyone can create a private wallet within one minute. The private wallet represents a “bank account” on the blockchain. As long as the wallet’s private key is in your control, all of the assets are under your full custody and ownership, no one can steal them from you. Asymmetric cryptography gives individuals an asymmetric power for safeguarding their own wealth against external forces, as long as the private key is secured, private property can be protected as sacrosanct and inviolable. We don’t need to delegate our money to the banks and behave under their mercy.
Then there is the beauty of blockchain transactions. In transacting Bitcoin or any other cryptocurrencies, all you need is a self-custody wallet and pay some network fee. No one sits between you and the recipient. You have the power of authorizing your transactions and the certainty that they get executed. In contrast, traditional banking often subjects innocent people to limitations and discrimination. Once, a wire transfer my then-boyfriend made to me was cancelled simply because I have a foreign name, which was deemed suspicious by the bank! This incident not only eroded our trust in the bank but also, amusingly, caused mistrust between us.
Building on the progress of blockchain, we already have financial applications embodying a trustless nature. These applications enable users to transact without the need to trust anyone. They are deprived of the power to unilaterally change the protocol or touch users’ money. Simply said, they cannot do evil. Uniswap, Liquity and DeGate are the pioneer examples. They hand over the power to control the protocol, leaving the application to operate autonomously based on preset rules. When using them, you always know what will happen. The outcome is a certainty. Rules written in the smart contract decide how things should work. No one can unilaterally change the rules. The smart contracts are open source, available for anyone to verify. My nightmare with Kraken won’t happen on a trustless application. It is the painful bit by bit that pushes me further into exploring the extremes of what is possible.
In the face of these substantial developments, people still argue, ‘But I don’t see how these things will ever be realized in real life.’ I want you to temporarily set aside your usual mindset, the one long domesticated by the established social order. Get in touch with your inner desires, and envision a new paradigm under the trustless framework. Would you like it or prefer to stay in status quo? We should adopt the attitude of admiring an abstract artwork to reflect on the avant-garde development of blockchain technology. Go beyond conventional norms, let your imagination guide you into the wild.
Choosing crypto is an act of ultimate romanticism. In the crypto community, among those who, beyond seeking 100x, also pursue the value of crypto, I always see a wild and romantic heart in them. I myself am the same, “peaceful but no less revolutionary”, borrowed the words from Erik Voorhees. Essentially, what we work for is an equitable, fair and free society. These should be the default, but in today’s mainstream viewpoint, they represent an upside-down disruption of the current order.
What will never be trustless?
For better or worse, human relationships will never be trustless. We can’t be programmed like a bot. Emotional, vulnerable, multifaceted — this unique complexity makes navigating human relationships a constant challenge, if not the biggest challenge in life. We may want to open up but fear getting hurt; want to trust but not too soon, not too much; attempt to go all-in but stop at the edge — what if below is a cliff leading to free fall?
The trust expert Botsman defines trust as “a confident engagement with the unknown.” The first time I watched her TED Talk, ‘We’ve stopped trusting institutions and started trusting strangers, I was not into crypto yet. Today, rewatching it with my personal experiences in the background, I felt a sense of validation.
