You may not be aware of it but trust is a key element for both cryptocurrency adoption and its sustainability. For understanding the importance of trust, first, we have to understand changes that happened in the trust model throughout the years.
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Changing the trust model
From physical goods to people and institutions
We went from trusting some things, such as Rai stones native for Yapese or African’s aggry beads, to trusting someone, such as banks and other financial institutions. Back in the day, it was impractical to carry physical money like gold or stones, so the best solution was to invent a paper that could act as a voucher for existing money. That paper money was verified and issued by the bank who took physical money, gold, and instead gave a paper that represents the given value and was backed by physical goods. That made transactions much simpler but it also changed the trust model to a central authority – bank. People trusted banks with keeping their actual money safe. It all made sense until president Richard Nixon took the dollar from the gold standard which basically meant that fiat money isn’t backed by anything except trust in the central banks or better say government who has control over our monetary system. The value of today’s money comes from legitimacy made possible by the government and that is how we changed the trust model from trust in physical goods to trust in government.
From people and institutions to technology
Since then, we have witnessed several financial crises caused by the incompetent management of the monetary system by the government. This led to a loss of trust in institutions, and it was precisely due to the financial crisis of 2009 that a new paradigm began with Bitcoin as a decentralized way of transaction without the mediation of central authority. Blockchain technology, on which Bitcoin has been built, shifted trust from institutions to trust in technology. It means having trust in a new paradigm that has the potential to make our money more democratic.
Future of trust
The new paradigm is still in its infancy and there is a long road before the world fully accepts that shift. It is people who give confidence to institutions, other people, or technology that only then can become legitimate. We, humans, have been given the opportunity, as well as the responsibility, to change the world for the better, and for that reason, it is necessary to learn and be informed because education is the key to the progress of our civilization.