Bitcoin is trustless

If a perfect money existed, it would allow people who don’t know eachother to transact without the need to trust an intermediary to facilitate it.

Monetary transactions typically imply the trust of centralised third parties to ensure the transaction is valid. The bank of the sender, the bank of the receiver and the various institutions involved in the layered construct that is the traditional finance industry. A single transaction requires the intercommunication of multiple opaque, private ledgers updating their entries in a clunky, sometimes time-consuming process.

Just by holding your money in a bank, you’re trusting your bank that they will be able to honour your withdrawal requests at any time. Something that may not be possible as the banks tend to retain only a thin reserve of your deposits.

The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.

Satoshi Nakamoto

Furthermore, by simply holding fiat bank notes (government issued currency) you’re also assuming trust in your government and central bank that it will uphold the value and convertibility of that money. A trust that was spectacularly shattered in Argentina, Lebanon and a growing list of countries that suffer hyperinflation.

Heavy-handed economic policy from unscrupulous governments can also render certain notes useless. As happened in India in 2016, when specific denomination rupee notes were suddenly declared as no longer legal tender. Leaving people scrambling to get them converted before the deadline.

Another trust you’re assuming by holding fiat, is for your government not to become grossly authoritarian and confiscate your money for taking part in, or holding beliefs in something it deems objectionable.

By holding bitcoin, you don’t require trust. You don’t need to trust a third party to transact. Transactions are peer-to-peer and are verified by the nodes and miners that make up the decentralised network. There is no centralised entity that needs to be trusted to not impose their will, censor transactions or confiscate your money, nor be co-opted or coerced by outside forces to do so. By holding bitcoin in responsible self custody, your money simply cannot be confiscated. Unlike the fiat in your bank account, your bitcoin can only be accessed through your private key protected by your seed phrase.

You don’t need to trust an authority to not inflate the supply. The immutable Bitcoin code, through the difficulty adjustment algorithm and programmed block reward, ensures a perfectly predictable inflation rate. There are no egocentric money manipulators in Bitcoin, there is only code.

There are two distinct messages at play– fiat overlords such as Christine Lagarde, Agustín Carstens and to a lesser extent, altcoin founders tell us we should trust them with their issued money, and willingly or not, advocate for a system where money can be manipulated by people who are likely corrupted by the desire for power, wealth or political favour.

And that of bitcoin maximalists who advocate for something that represents a paradigm shift in what we consider money to be at its core, and how we regard it — A monetary system that is devoid of human interference, a system dictated not by the whim of central planners, but an entirely trustless system based on consensus. Enforced by immutable computer code and mathematics.