Can we ever truly have a trustless system of exchange?

The trustless exchange of value - it's the end-goal, many would argue, of cryptocurrency. Is it just a matter of time?

Being able to send and receive monetary value in exchange for a desired good without a trusted intermediary - is this just a pipe dream?

After all, at some point, it's pretty hard to get away entirely from trust somewhere along the line.

Let's look at a few examples of how, despite the end-goal of achieving a trustless system of monetary transaction, we have a long way to go.

Wallets

When you store your funds in a wallet, there is an element of trust that can not be ignored. It's true that many wallets are open-source and can therefore be scrutinised in public, but the vast majority of users do not have the capacity or ability to truly ensure that the wallet of their choice is entirely reliable. Additionally, many wallets are, indeed, not open-source, and therefore, your funds, at least to some extent, are entrusted to the technology of the given wallet.

Take the example of the Ledger Nano S - probably one of the safest ways to store your funds, other than on a paper wallet (which, unless you go through a very stringent series of security steps, can also be vulnerable). Ledger admitted recently that even their rock-solid platform is vulnerable to attacks that may change the destination address of your wallet and must be checked visually using the "monitor" key to observe the address directly on the hardware device. This has been quite disconcerting to a number of Ledger Nano users, for obvious reasons. Ledger does plan to implement steps to ensure users take advantage of the monitor function for further protection, but the point is, there is still an element of trust required in using this tool.

Scammy ICO's and tokens

This, to me, is on the buyer to do the research. It's true there is a degree of trust in any investment - but it's a risk we all know going in. The Bitconnect fiasco should have taught naive investors to do their own research and to beware any deal that gets them to exchange their valuable money for a token that stands in its place, in return for amazing gains. Any system that promises giving your hard-earned gains to a centralised agency to hold in trust, for the pay-out of "interest", should not be trusted. I'm looking at you, Davor Coin and Zouk coin! Same goes for fake air-drops and giveaways on bogus Twitter accounts. If it seems too good to be true, it probably is!

Exchanges

Most exchanges, as of now, run on a centralised system whereby users entrust their funds to be held in exchange wallets. If the exchange is hacked or shut down, users can lose their stored funds. There is an emergence of decentralised exchanges that enable peer-to-peer exchange of funds, reducing the need to trust and eliminating an intermediary in the trading process. This is a major positive step in trustless exchange that, at the very least, significantly reduces points of vulnerability in the exchange of cryptocurrency.

Value

Now, I know one could argue that this is a silly point. Of course, token value is dictated by the free market and therefore requires no trust whatsoever. Not entirely true. Numerous tokens, the most obvious of which is Tether, actually stake their reputation on the trust that their token is worth a particular amount - in the case of Tether; the rough equivalent of the U.S. dollar. Many critics of Tether are clamouring for a full audit of Tether reserves to ensure the veracity of the token value. There are other tokens that also promote themselves on the stability of their currency value, such as BitUSD and the recently announced Royal Mint UK's future issuance of a gold-standard token that is directly tied to the value of gold. This requires trust in the quality of the entity backing the token - and has a profound effect on the market as a whole.

Ultimately, all money is based on a consensus of value. If users agree to a particular value, the currency then holds that agreed-upon value. This is true of all forms of money. This involves a degree of trust in the established system and is subject to changes beyond any one user's control. World events, controversy, manipulation, panic, fear, and euphoria all have their effects on the value of money. It is entirely subjective when you really get to the heart of it. This is true of commodities, as well. Oil is only worth what it's worth because of supply and demand, its utility, and policies that directly and indirectly influence its value.

So, I'm afraid we're all just going to have to keep trusting each other for a while. Hopefully, we will have more control, in time, over who we have to trust. That's just a matter of time.

image source:
https://www.tumblr.com/search/trust%20%20fall

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