The promise of cryptocurrencies is, in part, that users no longer have to trust in a central authority. But in many ways, the requirement of trust in a central authority has been replaced by the requirement of trust in a half dozen separate entities. Each of which may not be worth of trust.
Imagine I found some clip art showing an abstract representation of trust, like a padlock or a handshake, and placed it here.
This is not meant as an attack on cryptocurrencies. Instead I want to focus attention on areas that could be improved and possible solutions.
I intend to address layer of trust in my likely incomplete and somewhat overlapping list:
The technologies behind blockchains are likely some of the most trustworthy components. For example, hashing algorithms are well studied and you can find detailed information about each one. You can even find published attacks that test and may degrade their security.
The trust here lies more in the implementation of the algorithms and the representation of the work. There are few among us that have the time and background to research each coin and the algorithms it is using, or to dive in and truly understand how a cryptocurrency is made secure. Instead, we have to trust that others have done the leg work, and that those using the technologies are doing so correctly.
Case in point: Coin MAGI (XMG) is a well meaning coin that has a flawed implementation, which I opine about here: https://steemit.com/cryptocurrency/@superdesk/the-magical-thinking-of-coin-magi-xmg
I only realized that XMG had an issue after someone began successfully exploiting a weakness in the implementation to extract coins unfairly.
I don't have any real advice for folks on this one other than to do your best to get a basic understanding of how bitcoin works. This will hopefully allow you to "sniff-test" new coins to see if it sounds like the developers know what they are talking about. Or you could get an advanced degree in a relevant field and become a bonafide expert.
I'll take a look at another point of trust in the next post.
