Pictured: https://www.iizcat.com/post/4418/Hilarious-comic-about-trust-and-the-cat

I don’t want you the trust me, I want you to validate what I say yourself. Placing trust in other humans is a necessity and happens everyday in life, whether it's the bus driver, a chef or your work colleagues. Many things in life involve trust but also many things don’t have to. In the case of Blockchains and cryptocurrencies, the whole idea is the value comes from removing trusted intermediaries in interactions and replacing them with mathematically verifiable proofs.

For example, if I tell you 1+1=2, do you believe me? Why would you need to ‘believe’? Believing in this context means you trusting what I have to say without logic or question. However, you can actually prove that 1+1=2 is true without needing me involved. Proving that something is true is much better than believing as you can come to a conclusion about something in a universal, transparent, provable way without needing to involve any third parties to ‘trust’. Our brains do this all the time to validate sensory data around us. The brain universally accepts that the sky is blue and above our heads as we can use sense data from our eyes and confirm this observation with others in our social network, we can prove then that this observation is true without trusting someone else on the topic. Verifiability and proofs help our brain think less about certain information and focus more on other more important things- if we were unsure the sky was above our heads every moment of every day it would be quite worrisome as perhaps it could fall down and crush you at any moment, but we know this not to be true as we can validate the fact that it wont fall down with a number of mathematics, observations and data. ‘Trustless’ is better than ‘trusting’ and in this context allows us to live more fulfilled lives.

Incentives

Asking these questions can lead to a number of subsequent questions which can lead to a better understanding about the motivations of the people making the announcement. Maybe the company announces a blockchain because they want to pump their stock (https://www.bloomberg.com/news/articles/2017-12-21/crypto-craze-sees-long-island-iced-tea-rename-as-long-blockchain) and maybe a central bank just doesn’t like competition to their monopoly (https://youtu.be/iFDe5kUUyT0?t=78).

Most of the time people do the things they do because of incentives. Nobody would go to work everyday if you didn’t get paid. Payment is the incentive to work, get paid then you can do other stuff you are interested in with the money. It is no different when we are talking about trust. What are the incentives for people to trust and for someone to ask you to trust them, are the incentives aligned? Can they be trustworthy? Why can they be trusted? Alot of these words trustworthy and trusted are asking a question about incentives- if someone can benefit at your expense then it would make sense not to trust them. Likewise if both people can benefit from the trust relationship then it might be beneficial to trust them, the incentive there is that you can gain without any expense.

So aligning incentives and trust are very important, often you need to identify the incentives before concluding that trusting that person is the best course of action. However in a trustless transaction the incentives only involve one party, yourself- and can therefore be much less risky to determine the resultant outcome. If I know that fire is hot as a universal truth, I can easily validate that sticking my finger in fire will hurt and be a bad outcome for me. I am not taking any risk in this situation that ‘fire is hot’ as I have determined this to be true based on verifiable mathematical truths, that fire is above a temperature of 100 degrees. I can therefore take an action (not sticking my finger in the fire and therefore not get burned) with a 100% success rate. It is much easier for me to weigh these incentives when I dont need to deduce the Why the fire is hot today, if the fire is cheating me or take a risk on whether another party has the same incentives as me.

It is therefore evident that in trustless scenarios, incentives are neutral and depend entirely on the individual making a decision. This is an excellent state of affairs as I have now de-risked my decision making so I can make more positive decisions in my life. Trustless proofs are what get us here.

Transparency

Trustlessness can only be achieved through making the proofs verifiable to the public and by ‘public’ we mean a distributed number of verifiers who do not trust each other. If a scientists tells me he created a time machine but only tells me, this would have a lower level of trust than if he told 1million people and provided the plans to the time machine to the public. Transparency is key to eliminating risk and removing the need to trust.

Verifiability

A Trustless Truth- Why Is This Important?

Government issued money relies entirely on ‘trust’. Cash itself is merely an IOU for the amount of government money issued on the paper, it used to be an IOU for an equivalent amount of gold but this has not been the case for almost 50 years. Banks by law hold only a tiny fraction in reserve of the amount of money they owe an individual, by definition if everyone wanted their money back from the bank the money is not there, the numbers in your account are fake but the bank is betting that you will trust them enough for everyone to not want their money back at the same time (see: Bank Run https://en.wikipedia.org/wiki/Bank_run). This truth is often hard to grasp for some people at first but is fundamental to understanding the financial system.

Luckily we now have trustless money. Cryptocurrencies represent verifiable, transparent money with built in incentives to ensure the integrity of those participating in the system. The key note here is that cryptocurrencies are voluntary, no government decree or use of force is required for people to use it and value it, the value is derived entirely by a free market of people exchanging it for what they think it may be worth at any one time. Money touches all aspects of everything in our lives and ensuring that this is as free from coercion as possible is essential to ensuring a long term sustainable and morale economy, this is why the difference between trust and trustlessness matters.

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