The existing finance system is largely reputation based, with a light side of contract enforcement and a heavy dose of middlemen. It mostly works, but one of the biggest advantage of crypto stuff is removing the need for reputation and trust.
Except it doesn’t. That’s exactly what we’ve learned over the last decade. It never did either of those things. What it did is that it clouded reputation and trust just about enough to trick people into the illusion of a “trustless” system. There is no such thing. In the end you trust the coders trusted by the people who use the apps implementing the blockchain. There’s no tangible difference to trusting the coders trusted by the banks you use. Yes, with some cryptocurrencies they’re not associated directly with a centralised organisation. But that will absolutely change over time if the cryptocurrency ever becomes relevant to the big corporations of the world. Just as the WWW in practice now is controlled by Google and Apple.
The point of selling the idea that a cryptocurrency is “trustless” is to trick you into trusting it just long enough to pull off a Ponzi-scheme or rug-pull. And yes, that goes for Bitcoin too.
> one of the biggest advantage of crypto stuff is removing the need for reputation and trust.
I don't think it does that, though, at least when used as a currency. The irreversibility of crypto transactions means that you have to have some trust that the person you're dealing with will be willing to make things right when erroneous transactions happen.
When people say "trust" in the context of Bitcoin, it's about not having to trust a middle man, e.g. PayPal, who are notorious for capriciously locking you out of your account and stealing your money, or denying service to marginalized populations.
It doesn't mean you can't get ripped off by the party you're transacting with directly, but neither does cash, unless you pay for some kind of insurance. Which you can also do with cryptocurrency.
Credit cards come with a form insurance built in, but that doesn't mean you're not paying for it (they charge fees), including when you trust your counterparty and don't want to pay extra for insurance on a low-risk transaction.
> When people say "trust" in the context of Bitcoin, it's about not having to trust a middle man
That's all fine if you're a cryptocurrency guy, but in terms of what ordinary people mean by "trust", I don't see how cryptocurrency removes "the need for reputation and trust." You still need those things.
> neither does cash
True. Which is why cash also has a need for reputation and trust.
All I'm asserting is that the need to trust people is not eliminated by using cryptocurrency. How is my assertion wrong?
Someone says that TLS secures your credit card number when buying things online. Which it does.
You say that it doesn't do that, because someone could break into your house and install a hidden camera to capture you entering in your credit card number and it doesn't prevent that.
But you use other things to prevent that. That isn't the kind of security that TLS claims to provide.
And notably, there aren't a lot of alternatives to the kind of trust that blockchains would allow you to avoid placing in the likes of PayPal.
> The irreversibility of crypto transactions means that you have to have some trust that the person you're dealing with will be willing to make things right when erroneous transactions happen.
The cypherpunk answer to this dilemma is that revertability of transactions under some circumstances is a service that, if it is desired (for quite some applications of cryptocurrencies, it is), should be build in a layer above the "bare-metal" blockchain.