Don't believe me, verify it yourself

The author, jl2012, is a Bitcoin technology enthusiast from Hong Kong and the drafter of three Bitcoin Improvement Proposals (BIPs) related to Segregated Witness.

The most interesting thing about the Scaling Bitcoin conference held in Hong Kong in December 2015 was probably the conversation between miners mainly from China and developers mainly from the West. During the two-day conference, I heard many times that Chinese miners felt that they were not trusted and questioned why the developers only talked about Chinese miners and not American miners. This is actually not in line with history. In 2014, the British company GHash.IO exceeded half of the computing power of the entire network many times, which attracted a lot of reactions, and even made core developer Peter Todd publicly announced that he sold half of his Bitcoin. He may be the most persistent developer in decentralization. You may not like his attitude, but he treats miners from the East and the West equally. I also heard another core developer say, "I believe that Chinese miners are well-intentioned, and maybe they can speak for the Chinese government, but I will never trust the US government."

It seems that developers generally have a distrustful attitude, not targeting miners from China. This reveals a very important cultural difference: Western culture does not like to talk about trust, but uses contracts to regulate behavior and enforce contracts by law. This tendency to distrust is even more obvious in the Bitcoin community. In the first paragraph of the white paper published by Satoshi Nakamoto in 2008, he made it clear that he wanted to invent a remote payment system that did not require trust in a third party.

In the traditional financial system, face-to-face bartering is the only way to avoid trusting a third party, such as exchanging silver for rice. You can also use banknotes, as long as you trust that the central bank that issues the banknotes will not over-issue them. But if face-to-face transactions are not possible, the UnionPay and Alipay that everyone is familiar with must have an intermediary to complete the transaction. What is the problem with relying on trust? In fact, there is no problem in most cases in daily life. When shopping online, using Alipay is not only no problem, but also very efficient. This efficiency is actually based on trust: imagine if you don’t trust Alipay at all, how inconvenient would Taobao be? But this trust is not unconditional. The best example is that Taobao has banned virtual currency-related products since 2014. Once trust is broken, do we have to return to the primitive society of face-to-face bartering? Yes, if there is no Bitcoin.

The Bitcoin network uses open source software and cryptography to allow the payer and payee to complete transactions without meeting or trusting a third party. This is the first system in human history that has successfully achieved this function, which is what makes Bitcoin unique. However, trustlessness comes at a great cost, as each participant must independently verify all transactions, which has high bandwidth, storage, and computing costs. Some people think that Bitcoin will replace banks and the government's right to issue currency. In fact, in most cases, the cost of these systems is still lower than Bitcoin. Using cash to buy coffee and using Alipay to shop online will remain the mainstream in the foreseeable future. If we relax the trustlessness feature in order to allow Bitcoin and Alipay to compete directly, it would be more convenient to use Alipay directly.

What is the value of Bitcoin's uniqueness that does not rely on trust? First of all, it allows you to store wealth without trusting anyone. In the past, you had to dig a hole in the mountain to hide gold, but now you only need a computer file or even a piece of paper to store unlimited wealth and carry it with you.

In addition, it can allow people who are not trusted by the traditional system to get financial services, such as minors and entrepreneurs. In Hong Kong, a secondary school student used Bitcoin to start his online shopping business. Concepts that were impossible in the past, such as anonymous paid Wi-Fi hotspots or online video services that are charged per second, can all be realized through Bitcoin.

Another thing is to provide options when trust fails, such as when Alipay prohibits certain transactions or the banking system no longer operates normally. Don't think that this kind of thing is far away from us. Even in advanced countries such as Iceland and Greece, when Greek banks were closed in 2015, some people used Bitcoin to transfer money across borders and exchange cash.

Is it really impossible for Bitcoin to compete with traditional payment systems? Not necessarily, and it may not sacrifice its trustless nature. I will discuss this in another article later.

In summary, not having to trust a third party is what makes Bitcoin unique and what makes it valuable. Any changes to the system should be in this direction, otherwise we are just building another centralized system that is less efficient than the traditional system. Please don't believe what I say, learn it yourself, think it yourself, and verify it yourself.

By jl2012
Source: Babbitt Information (http://www.8btc.com/do-not-trust-verify)