The illusion of a trustless society

Libertarian proponents of crypto currency and decentralized finance wish to create a trustless society. They wish to minimize the scope of trusted third-parties such as governments, banks and public insurance. The rewards are lower taxes and a greater control over one’s own fate. But what are the costs?

To trust somebody else is to outsource responsibility to them as well. The more I trust my employees, the less I am worried about what they are doing in their 8-hour shifts. The more I trust my public insurer, the less I am worried about my access to healthcare. The more I trust my bank to secure my savings in the local currency, the less I have to worry about its safe custody.

The alternative – to design a trustless society – may protect you from somebody else exploiting you. However, the onus now falls on your shoulders – to be your own bank, your own insurer, and your own police force. Do you trust yourself to do a good job on all those fronts?

Security
Source: xkcd

By not trusting somebody else, you don’t live in a trustless society. You are merely trusting yourself with everything.

2 thoughts on “The illusion of a trustless society

  1. Both choices have their pros and cons.

    Despite the bailouts after the financial crisis and with countries indiscriminately printing money, I still trust the traditional banking system with the majority of my assets. I do have a minimal amount stashed away in my ‘own’ bank though.

    I think this debate is healthy. It’s great that governments now face stiff competition from cryptocurrencies and decentralized finance. However, it is important to not get carried away by either side.

    Like

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