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Truster Vs. Trustless (Part 1): The Role of Trust in the Means of Exchange Operation

Trustless has become a rallying cry for Bitcoin evangelists, focusing public attention on the fact that Bitcoin enables P2P transactions without the participation of a trusted third party acting as an intermediary.

Bitcoin makes it possible to conduct money transfers without intermediaries — intermediaries who could, otherwise, gain control over funds in a transaction, censor transactions, or act as points of failure. Does this give grounds to assert that Bitcoin and other cryptocurrencies are a form of money that does not require trust? Is it possible to completely eliminate trust from monetary relations, and is there even a need to? This article is devoted to the study of the role of trust in monetary transactions, including cryptocurrencies, and its main conclusion is that this role is hard to overestimate.

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The Need for Layer 3 on the Internet of Value

Over the past decade, we have witnessed the emergence of revolutionary innovation, of which the evolutionary significance is yet to be fully recognized. Of course, we’re referring to the blockchain, cryptocurrencies, and, more generally, the phenomenon that we describe as the Internet of Value. Blockchain and related technologies have the opportunity to transform the world of finance and other value systems, in exactly the manner by which the Internet has transformed the way we exchange information.

There have been some key milestones leading up to this point: the launch of Bitcoin in 2008; the emergence of altcoins from 2011 onwards; the launch of Ethereum in 2015. We call this Layer 1 — the foundational level — with the economic function of value creation and the technical one of ensuring the basic functionality of accounting and transfer of crypto assets. All of this is implemented on the basis of distributed registries and with the conditions of interaction strictly regulated at the code level.