Bitcoin and Trust

[lixiaolai]

People are always hesitate to fully accept bitcoin because of lack of trust.

Ripple tries to solve this by developing a p2p IOU mechanism. (..., which seems to me an immature solution).

However, it is often neglected that a trust involves two parts: trust between users and bitcoin, or trust among bitcoin users..

As for trust between users and their preferred currency, no solution is better than bitcoin. Bitcoin solved the problem of "double spending" by creating a universal account book (block) with p2p network, by which books, coins, transactions are all unable to counterfeit. No currency in the history does that. Therefore, bitcoin is now perhaps the single currency that users can absolutely trust.

What is uncomfortable is the trust among currency users, which, in my opinion, is in fact out of realm of technology. No technology can force a fraud to be a honest individual, or vice versa. For centuries, people have been trying to solve this problem, by building bank, issuing credit cards, and only end up to little.

In a word, people just blame bitcoin with a flaw that doesn't belong to bitcoin at all.

However, there is a possible solution: time. One day, when there're enough users who openly use bitcoin with their true identities and do not care about alleged "anonymity of bitcoin", trust would be prevalent.

[oakpacific]

What's interesting is that Bitcoin somehow explores this problem further in the cryptographic direction, if multisig is widely implemented, people can conduct escrowed transactions without using a third-party, you can create an address for escrowing funds which can only be withdrawn if both sides of a transaction agree, I am sure if such technique is widely used, a lot of new interesting scenarios of human interactions will appear.

[tvbcof]

One of the major things which draws me to Bitcoin is that it is completely trust-free by design.  Just like physical precious metals.  In fact I would go so far as to say it is The (with a capital T) big draw in my mind.

Ripple seems to be designed to use 'trust' systematically as a key element of it's system design.  That is fine and there is a huge use for such a system.  Probably much vastly than Bitcoin.  It's just less interesting to me for a certain class of problems that I am most sensitive to at the moment.

It is interesting to note that by happenstance Bitcoin is open-source while Ripple is apparently not.  That also is a huge factor in how I consider 'trust' and is a show-stopper for me to even bother to research it more at this time.

Lastly, I trust Bitcoin in large measure because it is a 'p2p' solution which hardens it against certain attack vectors.  As the 'p2p' nature of Bitcoin degrades so does the level of trust I have in the solution.  That is to say, the more I have to trust individual infrastructure providers to keep the system functional the less of a 'trust-free' system it becomes.  In my mind

[countryfree]

Trust comes with time. When paper money was launched, many people refuse them. They wanted gold or silver coins, heavy and bulky, but reliable and accepted everywhere. It took several decades for paper money to gain wide acceptance. Bitcoin is a 5-year old child...

[BitshireHashaway]

I agree that trust is a big problem. The problem with bitcoins that isn't the problem with real cash is it is a lot easier to scam/steal people's money and also it is a lot easier to remain anonymous. However, I think bitcoins have more advantages that will make it worth switching too.

[Abdussamad]

One of the major things which draws me to Bitcoin is that it is completely trust-free by design.  Just like physical precious metals.  In fact I would go so far as to say it is The (with a capital T) big draw in my mind.

You've obviously never bought physical gold or silver. The biggest risk there is that your are being sold non-precious metals with gold or silver coating. Or that you are being sold something that is less pure than advertised. That is why coins and bars from reputable sources carry a premium.

edit: To add, bitcoins are truly fungible. But they carry their own risks. The risk of being hacked and having all your coins stolen for instance or the risk of a fall in the value of bitcoin.

[tvbcof]

One of the major things which draws me to Bitcoin is that it is completely trust-free by design.  Just like physical precious metals.  In fact I would go so far as to say it is The (with a capital T) big draw in my mind.

You've obviously never bought physical gold or silver. The biggest risk there is that your are being sold non-precious metals with gold or silver coating. Or that you are being sold something that is less pure than advertised. That is why coins and bars from reputable sources carry a premium.

edit: To add, bitcoins are truly fungible. But they carry their own risks. The risk of being hacked and having all your coins stolen for instance or the risk of a fall in the value of bitcoin.

Buy PM's from a reputable dealer who's been in the biz for a long time.  I pay the premium for the piece-of-mind of having technical work done by a professional just like countless other services.  No biggie.

As a computer geek I can managed the risk associated with Bitcoin theft with as much precision as I need to make it vanish.  An Achilles heal of Bitcoin is indeed that this has proven fairly challenging for ordinary people and many BTC have been lost to thieves.  It is not the only system which undergoes such a 'transfer of wealth' though.

To summarize, both gold and Bitcoin allow me to trust myself rather than to need to trust others.  I like that.

[Abdussamad]

One of the major things which draws me to Bitcoin is that it is completely trust-free by design.  Just like physical precious metals.  In fact I would go so far as to say it is The (with a capital T) big draw in my mind.

You've obviously never bought physical gold or silver. The biggest risk there is that your are being sold non-precious metals with gold or silver coating. Or that you are being sold something that is less pure than advertised. That is why coins and bars from reputable sources carry a premium.

edit: To add, bitcoins are truly fungible. But they carry their own risks. The risk of being hacked and having all your coins stolen for instance or the risk of a fall in the value of bitcoin.

Buy PM's from a reputable dealer who's been in the biz for a long time.  I pay the premium for the piece-of-mind of having technical work done by a professional just like countless other services.  No biggie.

As a computer geek I can managed the risk associated with Bitcoin theft with as much precision as I need to make it vanish.  An Achilles heal of Bitcoin is indeed that this has proven fairly challenging for ordinary people and many BTC have been lost to thieves.  It is not the only system which undergoes such a 'transfer of wealth' though.

To summarize, both gold and Bitcoin allow me to trust myself rather than to need to trust others.  I like that.

I am a computer geek too but I am still not 100% confident that I have done enough to guarantee the security of my coins. Also computer geeks have been robbed of coins too. Just the most recent incident that has come to light:

http://www.reddit.com/r/Bitcoin/comments/1e79ig/how_were_my_encrypted_bitcoin_and_litecoin/

About PMs, in my country only one company is allowed to import gold. Trust in the purity of gold is so low here that gold sells for a lower rate than outside the country. People actually travel to Dubai just to buy gold because they trust the jewellers there more than the ones here. So it depends on where you live and your circumstances.

[tvbcof]

I am a computer geek too but I am still not 100% confident that I have done enough to guarantee the security of my coins. Also computer geeks have been robbed of coins too. Just the most recent incident that has come to light:

http://www.reddit.com/r/Bitcoin/comments/1e79ig/how_were_my_encrypted_bitcoin_and_litecoin/

About PMs, in my country only one company is allowed to import gold. Trust in the purity of gold is so low here that gold sells for a lower rate than outside the country. People actually travel to Dubai just to buy gold because they trust the jewellers there more than the ones here. So it depends on where you live and your circumstances.

A glance at that reddit indicates that that guy is on a whole different plane than I in pretty much all ways (not to sound to conceited or anything

Of course I don't treat all of my coins in the same way, but my main stash is completely inaccessible even to me unless I go to a bank and lock myself in a room.  Alone.  On top of that, I was super careful that even if my secure workstation (a BSD box) got hit with a hot-disk attack by someone who knew how to us dd, it still would not be possible to retrieve my secret keys.  My biggest danger is probably that I could be tortured to death by someone trying to get my stash, but at least they would fail.

As for PM's, ya, they are an expensive hassle to acquire and dispose of.  As much as possible I engineer such an events to be 'several times per lifetime' affairs for that reason.

If I'm getting paid, buying trinkets, etc, etc I'm perfectly happy with fiat, checks, Visa, PayPal, etc.  In fact I prefer them to Bitcoin in a lot of cases since I can do charge-backs or use the court system if I get ripped off.  Sacrilege here on the forum, I know.  That should earn me at least one more 'ignore'

[Abdussamad]

A glance at that reddit indicates that that guy is on a whole different plane than I in pretty much all ways (not to sound to conceited or anything

Of course I don't treat all of my coins in the same way, but my main stash is completely inaccessible even to me unless I go to a bank and lock myself in a room.  Alone.  On top of that, I was super careful that even if my secure workstation (a BSD box) got hit with a hot-disk attack by someone who knew how to us dd, it still would not be possible to retrieve my secret keys.  My biggest danger is probably that I could be tortured to death by someone trying to get my stash, but at least they would fail.

As for PM's, ya, they are an expensive hassle to acquire and dispose of.  As much as possible I engineer such an events to be 'several times per lifetime' affairs for that reason.

If I'm getting paid, buying trinkets, etc, etc I'm perfectly happy with fiat, checks, Visa, PayPal, etc.  In fact I prefer them to Bitcoin in a lot of cases since I can do charge-backs or use the court system if I get ripped off.  Sacrilege here on the forum, I know.  That should earn me at least one more 'ignore'

Well then there you have it. You've proved my point for me! Bitcoins carry a significant risk of being stolen and you have to go to extreme lengths to prevent that.

BTW I found this on the forum. You may be interested in it:

https://bitcointalk.org/index.php?topic=203531.0

[melvster]

People are always hesitate to fully accept bitcoin because of lack of trust.

Ripple tries to solve this by developing a p2p IOU mechanism. (..., which seems to me an immature solution).

However, it is often neglected that a trust involves two parts: trust between users and bitcoin, or trust among bitcoin users..

As for trust between users and their preferred currency, no solution is better than bitcoin. Bitcoin solved the problem of "double spending" by creating a universal account book (block) with p2p network, by which books, coins, transactions are all unable to counterfeit. No currency in the history does that. Therefore, bitcoin is now perhaps the single currency that users can absolutely trust.

What is uncomfortable is the trust among currency users, which, in my opinion, is in fact out of realm of technology. No technology can force a fraud to be a honest individual, or vice versa. For centuries, people have been trying to solve this problem, by building bank, issuing credit cards, and only end up to little.

In a word, people just blame bitcoin with a flaw that doesn't belong to bitcoin at all.

However, there is a possible solution: time. One day, when there're enough users who openly use bitcoin with their true identities and do not care about alleged "anonymity of bitcoin", trust would be prevalent.

yes it's a good idea you can be anonymous or public with bitcoin ... just add property="account" to your home page in HTML5 (a very nice feature!)

trust is a complex topic ... what you must do is break it down into reputation (the data) and trust (the calculation) but bear in mind that people are normally very bad at calculating trust at the extremes (black swans) and this can lead to spectacular fails such as the subprime crisis

[tvbcof]

Well then there you have it. You've proved my point for me! Bitcoins carry a significant risk of being stolen and you have to go to extreme lengths to prevent that.

BTW I found this on the forum. You may be interested in it:

https://bitcointalk.org/index.php?topic=203531.0

When I say 'trust' I am talking about 'counter-party risk'.  If you think I proved your point, you probably didn't understand much of what I said (and are likely not alone...)

As for some magic crystals to keep my secret keys safe, I'll pass.  Relatively speaking, and from the standpoint of someone who is proficient with basic computer security methods, it is not that difficult to reduce the risk of theft and loss to near zero.  Mostly just tedious and inconvenient.  Not unlike dealing with gold in fact.

[Stunna]

The main issue isn't necessarily trust in my opinion but rather the fact that bitcoins are NOT consumer friendly. The vast majority of people who use bitcoins are highly tech savvy. Bitcoins are complicated and security and storage is challenging.

[tvbcof]

The main issue isn't necessarily trust in my opinion but rather the fact that bitcoins are NOT consumer friendly. The vast majority of people who use bitcoins are highly tech savvy. Bitcoins are complicated and security and storage is challenging.

Why you filthy blasphemous heathen!  You are probably going to tell us that the Emperor has no clothes next I suppose

[oakpacific]

The main issue isn't necessarily trust in my opinion but rather the fact that bitcoins are NOT consumer friendly. The vast majority of people who use bitcoins are highly tech savvy. Bitcoins are complicated and security and storage is challenging.

Why you filthy blasphemous heathen!  You are probably going to tell us that the Emperor has no clothes next I suppose

The issue is exactly the trust. If you don't want to just trust math and your ability to understand it you need to trust someone else to not cheat on you. Bitcoin gives you the option to handle everything on your own, whether you like it or not is your business. Being completely independent and trustless always requires you to know better and do more, consider how the traditional American pioneer way of living is to build your own house, grow your own corn and raise your own cattles, skills a modern city dweller is never supposed to grasp yet indispensable for completely independent living.