Cryptocurrency: Time To Build Trustless Layers

Satoshi had a grand vision. Due to the events that led up to the Great Recession, the idea was to develop a currency that was completely outside the hands of the existing financial system.

This led to the idea that Code is law. It is a concept that is still embraced although not mentioned often by the mainstream crypto media. However, this is a path that we are going down.

While the focus at the base layer in many instances, we lose it very quickly when it comes to the applications. This is compounded by the fact that boatloads of venture capital money is rolling in. In short, we are moving away from developing trustless systems.

image.png
Source

Facebook Diem

This is probably the biggest atrocity when it comes to the breakdown of trust.

Most are aware that Facebook wants to bring out its own cryptocurrency called the Diem. This is going to be something that will be promoted to all of its 2.9 billion global users. It seeks to immediately change the global remittance market. Truthfully, this is something that is ripe for the taking.

Cryptocurrency has roughly 220 million users according to the most recent estimates. This is less than 1/10th the total user base of Facebook's major products. If just 10% of those individuals use the Diem, it would double the userbase of cryptocurrency.

Here we see a problem. Facebook showed itself to be one of the least trustworthy companies. Its political activism and censoring of people opens itself up to criticism. This also removes the idea that code is law.

Some might argue that the Diem will not qualify as a cryptocurrency. That might be the case. Either way, it will be framed as such, something that requires people to trust Facebook.

One of the biggest questions about this situation pertains to data. Facebook is one of the largest data harvesting companies around. This means that people's financial data is at risk of being sold just like their social information. It is something the company denies.

David Marcus, head of the project, stated this about the company's security and privacy:

Speaking to Yahoo Finance, Marcus wanted to reassure users that Diem, and the Novi wallet, are safe to use. What’s more, he said that no data will be used for ad targeting or any purpose related to the Facebook advertising model.

Marcus points out that from the onset, the Diem infrastructure was designed in such a way to avoid “commingled” financial and social data. That way, there is no controversy over a single entity holding data across different categories on its users.

Time will tell how many buy this.

Trustless Layers

All of this goes away from Satoshi's vision. In fact, this is the core tenet of cryptocurrency. Unfortunately, greed is getting in the way.

There should be no discussion about whether trust is an issue or not. Crypto systems are to be designed in a way that alleviates this question. If the code is sound, and proven, there is no debate.

Instead, we get a repeat of the present financial situation. Under our existing system, 3rd parties are involved. To do this, trust in them is required. Hence, billions of dollars are spent on establishing the brand as trustworthy. We have this throughout our entire financial system. It works well, until it does not (reference AIG).

There is debate about how decentralized and distributed many of the blockchains are. The need to control is a hindrance in what is being developed.

Some might feel that a system based upon trusting in code is apt for failure. Certainly, this cannot be worse than one based upon institutions which repeatedly proved to be non-trustworthy. How many times have people suffered due to the greed and corruption of these institutions?

Of course, for the longest time, there was no alternative. Today, we are seeing that change.

Or are we?

Centralized Applications

Whatever the status of the blockchains are, in terms of decentralization, it really does not matter. This only provides a foundation that is quickly being ruined by what is build on top.

Most of what we see in terms of applications and games is centralized. As noted, a lot of this is being funded by venture capital firms. This makes it no different than any other application on the internet.

Hence, we are seeing the evolution of blockchain into potentially another siloed system which is controlled by a few major entities that gobble up the competition over time.

If this persists, we are simply going to see a base layer of decentralization covered by a layered of "Walled Gardens".

Ultimately, it comes down to mindset. Do we want something that is truly decentralized and does not require the trust in brands or companies? For this to happen, the goal has to be open, decentralized, and distributed from the beginning. Anything short of that will only create a situation like what happened with Steem.

Decentralized Autonomous Organizations

We do have an approach that can help to alleviate all of this. By pushing for more decentralized infrastructure, we have the ability to build a similar second layer through the use of decentralized autonomous organizations (DAOs) By utilizing this business structure, we can quickly move away from the same old mindset.

According to Investopedia's What is the DAO:

The DAO was an organization that was designed to be automated and decentralized. It acted as a form of venture capital fund, based on open-source code and without a typical management structure or board of directors. To be fully decentralized, the DAO was unaffiliated with any particular nation-state, though it made use of the ethereum network.

This is obviously a bit dated but it drives the point home. Not only is this required at the base layer but we ought to insist upon it at our secondary layers. After all, it serves little purpose to have the base layer outside the reach of government and regulators if all the applications are under their umbrella.

Essentially, it takes us back to square one.

In the end, it is going to be those projects that allow the code to establish the trust that people gravitate towards. We are seeing a lot of upheaval caused by potential regulation, Wall Street entities, and the same mindset that infected our existing financial system.

If people want something different, they will have to insist upon it. We provide value by our decision of where we spend our time. Each minute spent on the Facebook network only enhances that value. The same holds true if we focus our attention on decentralized applications that are built upon blockchains that meet this criteria.

We need to get away from trusting entities and brands. They fail of consistently. With the entrance into digitization, the situation only got worse as users were consistently betrayed by companies through the selling or leaking of data.

The tools to change this are emerging. What is key is that we start to embrace them while pushing developers for more.

By doing this, we can firmly establish code as law.


If you found this article informative, please give an upvote and rehive.

gif by @doze

screen_vision2025_1.png

logo by @st8z

Posted Using LeoFinance Beta

Sort:  

I don't trust Facebook or any of the big tech companies at all regarding this. All they care about is their control and money.

Posted Using LeoFinance Beta

I definitely agree that a while heap of infrastructure could be replaced with decentralised networks for efficiency and transparency. However, despite my own beliefs, I do wonder if there are many more people (at least in the short to medium term) that actually like and want the lack of responsibility that having trusted middlemen gives them?

...I do wonder if there are many more people (at least in the short to medium term) that actually like and want the lack of responsibility that having trusted middlemen gives them?

That is a good question. I think it is a valid point but one of little consequence. The issue is systemic risk which these types of entities pose.

What we are building eliminates that.

Posted Using LeoFinance Beta

Code as law can sound a bit scary. Like, computers will rule it all.

Yet, when you think about the current Bank as law ... This is a downright nightmare scarry. In banksters we trust?

Yes, they (SEC, FB, ...) want to bring the old ways of doing business into the crypto field. To have power over their customers.

In a really decentralized crypto-based world there are no customers. SImply users. And the trust is built into the system. There is no way to misuse it.

!invest_vote

agreed so it's better to trust code ten to these profit-hungry companies no?

Without a doubt.

The code can be openly viewed and forked. With the corporate structure, there is often no choice.

Posted Using LeoFinance Beta

yeah and we can change it with the need of time while keeping it open for others to view

In a really decentralized crypto-based world there are no customers. SImply users.

To go one step further, users are actually, in most instances, stakeholders.

That really alters the picture a great deal.

Posted Using LeoFinance Beta

You are right. Another level higher, they are part of the governance. Active governance.

Code is law is no different than law is law. It's keeping your word by running good software. However, like ETH's hardfork from ETC, we still understand that the spirit of the law and the letter of the law are still very much up for interpretation.

Well, law is law can be broken any time as we see very painfully in the last year and a half.

 last month Reveal Comment

True! I could post some local faces to underline it yet ... ten thousand McDonald clowns are less scarier. We truly live in weird times where the fate of billions is decided upon by a twisted mind of few who think they have the right to decide for us. Who gave them this right? I didn't!

The difference is with code is law, if you do not like it, you can opt to move elsewhere with different code.

That is why we have so many different projects starting. There is no one size fits all.

Posted Using LeoFinance Beta

I think these public offerings are starting to go crazy. We started to deviate from the general target.

amazing I learn new every time I read you blog and yeah this is a big problem but as we are using crypto develop we also see that lot of problem and their solutions are being pushed to develop and that a great thing cause it's evolving unlike over gov financial system

It's going to be a difficult road to traverse. Everywhere along the way there are going to be legacy systems with handouts urging devs to take the money and sell out. We need to pay attention to what is happening and keep supporting the projects that make us more free, not less.

Posted Using LeoFinance Beta

That is true. How many developers does Facebook employ?

We need to get those who are all over the world involved and working on decentralized solutions. It is why the DAO on Hive is so important. We just funded both SpkNetwork and @brianoflondon.

This is starting the process of telling the story.

Posted Using LeoFinance Beta

Indeed. These are the projects that could ultimately be the backbone of what crypto truly should be. It's awesome they are here and we can participate in growing them from the ground up.

Posted Using LeoFinance Beta

Who knows? They may or may not make us rich in our lifetimes, but I truly believe they will be extremely important to not only the US, but the world down the road.

Posted Using LeoFinance Beta

Very informative and educative post. I never even knew about the currency that facebook is planning to initiate into it's system. Wow, that's shockingly amazing.


Posted via proofofbrain.io

Fully agree, but most people fail to see this. Some people are oblivious and prefer being controlled because they are used to it.

They are lazy and do not take the time to learn what is going on. Unless they are told by the mainstream media, they simply ignore it.

Posted Using LeoFinance Beta

Cryptocurrencies are here to stay and the time has come to appreciate the truth and transparency that blockchain offers. That has been one motivation that keeps me on the right tangent. It's about time to accumulate on a secured multi-coin wallet application like that of https://atomicwallet.io/.

pixresteemer_incognito_angel_mini.png
Bang, I did it again... I just rehived your post!
Week 74 of my contest just started...you can now check the winners of the previous week!
4


The rewards earned on this comment will go directly to the person sharing the post on Twitter as long as they are registered with @poshtoken. Sign up at https://hiveposh.com.

@ervin-lemark denkt du hast ein Vote durch @investinthefutur verdient!
@ervin-lemark thinks you have earned a vote of @investinthefutur !

This means that people's financial data is at risk of being sold just like their social information. It is something the company denies.

Who says they're not gonna do that?

We need to get away from trusting entities and brands.

That's gonna be a hard one for the masses. The mentality towards the need of centralization is so string, most of the individuals are expecting some sort of central entity dictating everything almost everywhere.

Posted Using LeoFinance Beta

Since I found Hive, I almost stopped using FB and I am so happy about it. Your article was very informative for me and easy to read, since I am just learning I still have hard time understanding some articles about crypto but yours was easy to follow. Thank you 🙏

Well that is how it will be framed especially since the Diem is a threat to the establishment (not an improvement).

This will get the likes of Elizabeth Warren on her soapbox attacking it at every opportunity. The average individual will have no clue about the difference.

Posted Using LeoFinance Beta