There’s a famous saying
“It takes ages to build trust & seconds to destroy it”
Trust is super important for any aspect of life.
Our economy is built on trust. We interact directly or indirectly with external factors throughout our day based on the trust that they’ll perform as we expect. With passage of time, trusts get stronger & stronger which leads to higher confidence in our own ability to perform. During any transaction, trust is super important. Once it’s established the transaction goes through smoothly.
In ancient times, humans primarily only depend on their small tribe with less need to involve a foreign element but with passage of times as the civilization have evolved, we have to work with unknown parties on daily basis. Our modern economy is built on multiple layers of trust where we are trusting the system to perform as we expect.
Due to my interest in Finance, I’ll focus on that portion only where the biggest example is the bank who controls our money. Regardless of whichever bank you see, there is generally a sense of trust and credibility. There is very rarely a thought that the bank will just shut down tomorrow or run with your money. We also have insurance where we do expect them to pay us whenever we have a claim. There are also government institutes where we believe they’ll be watching out for the bad actors and protecting us if some thing goes wrong.
This all system is TRUST. Though we actually can count couple of the institutes, they themselves are depending on multiple other. Living in a systematic society and 1st world country, we’re used to trust and certainly take it for granted. It’s like the water that would come when we open the tap; because that’s how I’ve seen since I am born.
With globalization, we’ve to trust international players as well as new entrants. Majority of time we don’t have an option or have no other choice. Recently there has been multiple cases where the trust has been shattered for the masses, sometime deliberately some time by accident. Example of deliberate would be company selling your data to a 3rd party without your consent or manipulating your opinions while in accidents where they genuinely were hacked. While I’ve been fairly cautious, I can’t possibly live off the grid.
My first encounter with crypto was 7 year ago and have to admit that it wasn’t a conscious decision but with passage of time I’ve gone deeply in love with the philosophy of open networks, cryptography and free-market economy. While there hasn’t been a single school or thought or system which has been able to put things in order on global scale, it’s hard to resist admiring a system which is built on such fairness. I won’t say it’s the utopia I dream of, but much better than other monetary systems which we have.
It wasn’t possible in the past to deploy such a grand operational financial system purely based on trust and cryptographic algorithms. Bitcoin network is running for more than a decade with the maximum uptime possible without any singular authority. Recently I came across a report which said that 1 in 5 American own a cryptographic asset. That’s massive because it may be in top few spots when it comes to an asset class. In case of bitcoin, you don’t care who generated the bitcoin or how much effort he has to put in, as long as network accepts it, it’s part of the system.
If you look at this behavioral change where the entire system is flat level field for all the participant, this put disadvantage the status quo at a massive disadvantage. Bitcoin and other cryptocurrencies are an experiment and relatively in the industry, but the impacts on economy & behavior are very undervalued. Companies and individuals are building and contributing towards a system with a self-rewarding schema that’s designed without any flaw. Yes there are needs for improvement but the philosophy behind it can be replicated towards other fields of life.
Crypto has built a trust that didn’t exist in the past and is only getting better from here. Systems will improve & I expect a hyperbolic economic shift due to induction of new products, ideas through collaboration.
World is turning out to be more equal playing field and should get more flatter from here on. This is healthier and with more financial openness, we’ll have a much better world .
I am really looking forward to decentralized financial systems AKA DEFI