- Trustlessness cannot work in a society that values the trust
- Bitcoin needs to clear the wrong perceptions
Bitcoin is the most well-known and valued cryptocurrency. It has been around since 2008. In its one decade of existence, it has evoked the interest of a wide range of people, and crypto enthusiasts believe that it will precipitate a financial revolution. Lately, Bitcoin has been enjoying a bull run. However, its upward trajectory has not crimped the perception that people are not ready for it.
The first digital coin offers to the world a financial system that is antithetical to the traditional financial systems, where central banks control the money. It has essential features to benefit immigrants, the unbanked population, those who do not trust banks and financial institutions and want complete control over their funds, and more people. Bitcoin offers more benefits than traditional banking systems, but still, when it comes to mass adoption, it has received a lukewarm response. Why is it so?
In the Bitcoin universe, anonymity is the fundamental right of the users, transparency is quite evident, intermediaries are inactive, and the word trust is redundant. Cryptocurrency is a peer-to-peer system that operates on trustlessness, involving only the fund owner and the fund receiver. ‘Trustlessness’ is a great concept but only on paper. In real life, people are less likely to accept a payment system that proclaims, “Trust is an outdated concept. People don’t need it to send and receive funds.”
Trust at the Heart of Any Currency
The absence of trust is likely one of the reasons why people are less enthusiastic about accepting Bitcoin. People are conditioned to adopt things and systems that have “TRUST” inscribed on them. For them, it is at the heart of any currency.
The traditional financial system works on the concept of trust in one another, and the trust in the central banks, financial institutions, and payment systems. Their trust is due to laws, monetary policies, regulations, and intermediaries. Bitcoin is a decentralized system that has interred regulations and central control. Because of its riddance of central control, libertarians are its biggest advocates. It, however, does not excite a lot of other people. They do not see a trustless currency as a viable alternative to fiat money.
Blockchains, cryptography, hash algorithms, distributed ledger, and mining are the components that keep Bitcoin free of central control. It is often the technology underlying the cryptocurrencies that get the most attention. Its potential users rarely get asked, “Do you want to use a system that requires no trust between transaction participants?” If asked, it will be rare to find an individual who will say, “Yes.” Trust permeates every aspect of his/her life. It’s difficult for him/her to use a currency that is based on “trustless trust.”
Lack of General Familiarity and Wrong Perception
People usually fear what is unknown to them. For many, Bitcoin falls in the unknown territory. There is a lack of general familiarity with it, although it is hitting headlines almost every day. Because they have no basic understanding of Bitcoin, the potential users have plenty of wrong perceptions about it.
The first wrong perception is that — it is illegal. Yes, several countries are contemplating banning Bitcoin, but there are many countries where it is legal and accepted as payment. And there is nothing illegal about Bitcoin or its underlying technology. Governments want to ban it because of the fear that they would lose control over money, and also like everyone else, they also fear the unknown. A couple of other wrong perceptions are that Bitcoin has become the currency of criminals, and people owning bitcoins go bankrupt.
Bitcoin has to solve the perception problem and improve its trustworthiness score if it wants people to acknowledge it.
Bitcoin has a lot of other issues that it needs to fix, including slow transaction speed and scalability. But it still is the most valued cryptocurrency in the market. None of the altcoins can pose a serious challenge to its market share. Bitcoin has a lot to offer, and it is only a matter of time before it gains mainstream acceptance.
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